Big update for new state-owned bank in South Africa

The Minister of Communications and Digital Technologies, Solly Malatsi, has invited nominations for the inaugural Board of the South African Postbank.

The Postbank primarily aims to expand access to banking services across South Africa, with rural and lower-income communities prioritised.

Although the Postbank has always offered minor banking services, it was strictly a savings subsidiary.

However, following the signing of the Postbank Amendment Bill, it will now be allowed to offer transactional accounts, credit, and other banking services.

President Cyril Ramaphosa signed the Postbank Amendment Bill in September 2023, which formally transferred Postbank’s shareholding from the struggling South African Post Office to the government.

This allows for the creation of a Bank Controlling Company, Postbank SoC Limited, opening the way for the Postbank to become a fully-fledged state-owned banking operation in the country.

Although it maintains the Postbank name it held under the Post Office, it is becoming an entirely new banking entity.

Malatsi has now invited nominations of suitably qualified individuals to serve as Non-Executive Directors of the inaugural board of Postbank SoC Limited.

The controlling company will oversee the strategic direction and governance of the Postbank in terms of the Banks Act.

The controlling company is thus crucial for the bank’s target of becoming the bank of first choice for underserved communities, enhancing financial inclusion and economic participation.

As per a government gazette, candidates will have to bring a diverse range of skills, knowledge, and experience essential for overseeing a state-owned or private financial institution.

Candidates will need knowledge, experience and skills in the following areas:

• Banking and Financial Services: transactional, lending, borrowing, investment operations and banking information technology at senior management level.
• Finance and Economics: financial management, accounting, auditing and economics.
• Risk Management: credit, market, liquidity, interest rate and operational risk.
• Corporate Governance: Experience in providing oversight based on best practice corporate governance frameworks for South Africa.
• Compliance: legislative and regulatory compliance and compliance risk management.
• Legal: corporate or commercial law relevant to financial institutions.
• Project Management: management of projects within financial sectors.
• Transformation for diversity and equity: in promoting financial inclusion.

Candidates will need a minimum of five years of board experience and at least eight years in an executive or senior management role in the banking or finance sector.

A bachelor’s degree will be required, while a postgraduate qualification is seen as an advantage.

Experience within the public sector governance is also an advantage.

Preference will also be given to candidates who enhance diversity in skills, gender, youth and disability representation.

Shortlisted candidates will have to undergo a fit and proper assessment in line with Banks Act requirements, as well as security clearance and disclosure of business interests.

The closing date for applications is 14 February 2025.

Question marks

There have been serious question marks over the Postbank and whether the state needs to create a new bank given the poor track record of state-owned enterprises.

Former Nedbank CEO Mike Brown said that there was no need for a state bank due to the nation’s high banking coverage.

Brown added that it is unlikely that it will have a viable banking model that will be able to do anything different.

There has also been a warning from the recent court battle involving the KZN-based Ithala SOC Limited;

The Prudential Authority applied to the Pietermaritzburg High Court for the provisional liquidation of Ithala, whose shareholder is the KZN provincial government.

The PA said that the application follows a series of regulatory and financial challenges faced by Ithala, which has led to it failing to meet the key conditions required to continue its operations.