National Treasury and the Reserve Bank have no objections to the creation of state-owned banks provided they are subject to the same legal and regulatory requirements as commercial banks. Their views were expressed during public hearings held on Tuesday by parliament’s finance committee on the Banks Amendment Bill proposed by EFF chief whip Floyd Shivambu. Finance Minister Nhlanhla Nene said in a letter to the committee the cabinet had already approved the Financial Matters Amendment Bill, which provided for state-owned banks on condition they were solvent and had government approval. These requirements were proposed to limit the fiscal risks state-owned banks could pose. In a presentation, Treasury chief director of financial stability and markets Roy Havemann said there were heightened risks for depositors’ money in a state bank because of the generally bad repayment culture (for example Eskom), problems with asset quality (Ithala Bank) and the fact that such banks often lent to s...

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