Banks say failure to pass insolvency amendments poses a risk to financial system
National assembly rules that there is no time to deal with proposals before it goes into a recess
The banking industry is at loggerheads with parliament after the national assembly ruled that there was no time to deal with a proposed amendments to the Insolvency Act before it goes into a constituency recess on March 20 ahead of the national polls. The national polls will take place on May 8. The Reserve Bank and the banking sector regard the amendments as key in order to secure existing international banking relationships. The Banking Association SA (Basa) has warned in a letter to finance committee chair Yunus Carrim that the amendments "are critical to the stability of our financial market." US banks have already indicated that they would have to terminate current agreements with SA banks if the Insolvency Act remains unchanged. "Foreign banks will simply be exiting the SA market and SA will have fewer or no counterparties with whom to trade over-the-counter derivatives or transfer risks from our economy. This will cause one or more SA bank failures and lead to a national fina...
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