Mboweni gives thumbs up to new finance bill that will shake up SA’s banking sector

South Africa’s minister of finance, Tito Mboweni, has announced his intention to introduce the Financial Matters Amendment Bill in the National Assembly in January 2019.

In an explanatory summary published on Wednesday (16 January), Mboweni indicated that the bill plans to amend a number of current pieces of legislation – including the Insolvency Act, the Military Pensions Act, and the Auditing Profession Act.

Arguably the biggest change, however, is an amendment to the Banks Act (1990) to allow for certain state-owned companies to be considered as public companies for purposes of the application of the Banks Act.

The amendment also determines prerequisites for these companies and their holding companies to qualify to apply for establishment as a bank, and provides for inconsistencies between the Banks Act and certain other legislation with respect to state-owned companies.

What it means for banking

Chantel van Zyl, an associate at Baker Mckenzie, said that the introduction of a state-owned bank would mean that – for the first time – a state-owned entity would be able to participate fully in the retail and commercial banking sector in competition with the private sector in South Africa.

Currently, the Banks Act only allows public companies to register as a bank or bank controlling company.

She added that the amendments would allow Postbank and the Land Bank to register and operate as fully operational banks.

“Postbank, which currently operates under various exemptions to the Banks Act, which were required for the bank to accept deposits, does not have a banking licence and is unable to operate as a fully-fledged bank,” she said.

“This may change, however, should the amendments to the Banks Act be promulgated.

“If Postbank is awarded a banking licence, it would be entitled to operate as a fully-fledged bank.”

In November 2018, Postbank indicated that it had double the amount of capital it needed to operate as a bank.

“Postbank also noted that, once it has obtained a banking licence, it intended to pursue opportunities to provide government-to-citizen services as well as lending activities with a focus on offering loans to small start-up businesses, Small, Medium and Micro-sized Enterprises (SMMEs), small-scale agricultural operations and the like,” said van Zyl.

The note can be read here.

Read: Absa’s big plans to target first-time home buyers

Must Read

Partner Content

Show comments

Trending Now

Follow Us

Mboweni gives thumbs up to new finance bill that will shake up SA’s banking sector