Government moves forward on plans to turn Postbank into state-owned bank

 ·26 May 2021

The department of communications and postal services is finalising plans to introduce the Postbank as a full-service bank.

In a presentation to parliament on Wednesday (26 May), the department said that it was currently reviewing comments on the South African Postbank Amendment Bill.

The bill provides for the establishment of the South African Postbank Holding Company, known as the Bank Controlling Company (BCC), in terms of the Banks Act.

This company will provide for the inclusion of financially excluded members of the public to participate meaningfully in economic activities. It will also provide a facility for some of the government’s financial services.

The department said that the registration of the BCC is necessary for terms of the Banks Act and to incorporate the new entity with the Companies and Intellectual Property Commission under the Companies Act.

After this, the registration of the BCC with the South African Reserve Bank is the final step in the Postbank license application and it will become a fully-fledged bank, it said.

State-owned bank – but not a state bank

While the new Postbank will be state-owned, the process is separate from the ANC government’s recent push to introduce a new state-owned bank, said the department’s Moses Ntshabele.

“The issue of a state bank is an initiative that is undertaken by National Treasury that in itself will look at a much broader concept of a state bank.

“What the department (of communications) is seized with is the corporatisation of the Postbank, with the ultimate objective of applying for a banking licence.”

“The Postbank is a state-owned institution, so for us we are not referring to it as a state bank in the context of that other discussion.”

“It will be a licensed state-owned bank – not necessary a ‘state bank’ in the context of National Treasury’s discussion.”

President Cyril Ramaphosa and Finance minister Tito Mboweni have both expressed their support for a state bank in recent months, specifically as a way of providing loans to poorer South Africans.

In a February roundtable, Ramaphosa said that the country’s banking sector is controlled by just a few banks and South Africans need more options in terms of accessing loans.

“I fully support the establishment of a state bank at an organisational and state level. There is space for a state bank. The Land Bank is a state bank. The IDC (Industrial Development Corporation), if you like, is a state bank. Many developing countries have a number of state banks.”

“If we had such an entity, even the R200 billion that we asked banks to administer could be channelled to it. And truth be told, our banking sector is risk-averse.

“They are entities that operate in the middle sector and are willing to take risks with debt levels that are now exponentially high. I would say we need a state bank and I would insist that it be run in accordance with the best governance principles.”

Read: Reserve Bank investigating feasibility of a ‘digital currency’ for South Africa

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