South Africa a step closer to new ‘full service’ state-owned bank
The Department of Communications and Postal Providers has actually tabled the South African Postbank Change Costs to the National Assembly, bringing the federal government’s strategies to shift the Postbank into a full-service bank one action more detailed.
The expense was tabled by interactions minister Khumbudzo Ntshavheni on Tuesday (17 May) and intends to place and alter meanings in the South African Postbank Limited Act to enable it to operate as a different entity to the South African Post Office.
It would permit the shareholding of Postbank to be moved from the South African Post Office (SAPO) to the federal government and enable the establishing of a Bank Controlling Company (BCC)– a holding business for the bank.
The Postbank is presently a subsidiary of the Post Office (SAPO) and just uses transactional and cost savings accounts. As a state-owned business, up until just recently it has actually been restricted from participating in full-service banking due to a number of policies and guidelines.
According to the department, Postbank presently fulfills all regulative requirements set out by the South African Reserve Bank to get approved for a full-service banking licence in regards to the Banks Act; nevertheless, it struck 2 difficulties:
- The legal dispute which avoided state-owned entities from being qualified to make an application for registration with the SARB as either banks or BCCs; and
- The SAPO Group not fulfilling BCC structure requirements.
“The only staying difficulty connects to the BCC structure which is being resolved through the existing suggested modifications to the Act,” the department stated.
The BCC’s function is to action in to recapitalise and support its subsidiary bank if it faces monetary problems. Nevertheless, the South African Post Office is not lucrative, and not in a position to perform this function.
Through the modification costs, a service to this issue is to get rid of ownership of Postbank from SAPO totally, making the minister of interactions and digital innovations the sole owner and investor of Postbank and its BCC.
“The alternative picked was the most feasible and cost-efficient to alleviate versus the threat that the federal government would be required to offer continuous assistance to SAPO in order to keep the structure of the SAPO group as the outcome of the ownership of Postbank,” the department stated.
The department included that Postbank is not being developed from scratch as a bank, however it has actually been an existing department with SAPO from the start and was later on included as a 100% subsidiary of SAPO.
The elimination of Postbank from SAPO likewise has direct monetary ramifications on the Post Office, it stated.
Apart from the implied decrease in the net property worth of SAPO caused by the separation of the Postbank subsidiary, there is likewise an implied restructuring of the SAPO company. The department and National Treasury have actually been dealing with discovering a service to compensate SAPO, it stated.
State-owned bank– not state bank
While the brand-new Postbank will be state-owned, this procedure is different from a current push by the ANC to present a state bank.
In 2020, president Cyril Ramaphosa stated that the federal government was thinking about the facility of a state bank as part of its efforts to extend access to monetary services; nevertheless, more just recently, the federal government has actually cooled down on the proposition for the time being.
In March 2022, financing minister Enoch Godongwana stated there would be no brand-new state bank as the nation did not have the required cash to back its development.
The submission of the area 43 application to the SARB is the last action in the Postbank’s banking licence application for it to be thought about having actually complied completely with all the requirements as stated in the Banks Act.