Nice and easy: Customers queue to draw money from an ATM outside a branch of Standard Bank in Cape Town. If the proposed state bank gets off the ground, it may be years before it can compete with the established retail banks that have ATMs across SA. Picture: REUTERS
Nice and easy: Customers queue to draw money from an ATM outside a branch of Standard Bank in Cape Town. If the proposed state bank gets off the ground, it may be years before it can compete with the established retail banks that have ATMs across SA. Picture: REUTERS

The state bank proposed by the ANC does not pose a threat to more established players unless government employees are compelled to bank through it, and takes the heat off the largest banks to promote financial inclusion, market participants said on Wednesday.

"The big threat long-term if it is established, will be if government forced state employees to transact via this bank because their salaries are deposited into the bank," said Wayne McCurrie, portfolio manager at Ashburton Investments. "Also, it will take a long time to get a footprint like the big banks. So for the immediate future, this is symbolic, similar to buying the shares of the Reserve Bank. All of this could change in December, when we will get a leadership change in the ANC."

At the ANC’s national policy conference, which ended on Wednesday, Telecommunications and Postal Services Minister Siyabonga Cwele was ordered to establish the bank within six months, a week after the South African Post Office’s Postbank submitted its application for a final licence with the Reserve Bank’s registrar.

STATE BANK WOULD BE PREFERABLE TO TRYING TO REGULATE THE BIG FOUR BANKS EVEN MORE.

"The call by the ANC national policy conference on the licensing of Postbank takes forward the previous calls on this matter by the party in government," said Siyabulela Qoza, Cwele’s spokesman. "The urgency in this call addresses the need to facilitate financial inclusion."

The four largest banks – Standard Bank, FirstRand, Barclays Africa and Nedbank – all have empowerment scores of 12.51 or higher, against a target of 14, for access to financial services, with Nedbank ranking the highest at 13.36 points.

During parliamentary hearings on transformation in the financial services sector earlier this year, ANC MPs suggested additional legislation to assist with access to credit and financial inclusion.

"[The state bank] would be good, I think, and preferable to trying to regulate the big four banks even more," said Patrice Rassou, head of equities at Sanlam Investments.

Although delegates have given Cwele six months to get the bank off the ground, his department said it would not cut corners in obtaining the licence.

"The licensing process has followed all the prescribed regulations of the Reserve Bank," said Qoza. "We hope the Reserve Bank will follow all its processes to finalise the application while expediting the process."

Postbank has R2.7bn in capital, according to a number of reports. While Qoza would not confirm this figure, he said Postbank was well capitalised and would not be competing with the commercial banks.

"We are not seeking to establish another existing commercial bank," said Qoza. "Postbank will offer affordable financial services to people and small businesses in rural areas."

McCurrie indicated this would probably be the best move: "The government does not have the means to capitalise the bank to make it a viable big bank. I also doubt that ordinary capital market borrowings by this bank will be at the same rate as the big commercial banks, making it more expensive to lend out loans."

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