SARB keeps banking sector exclusive

THE curator says only banks registered in terms of the Banks Act must be invited to bid for the assets and liabilities of Ubank, in which a substantial portion of liabilities are deposits from the general public that can, by law, only be held by registered banks.

Sekunjalo Consortium expressed its disappointment with the curators of Ubank after they said they would not be able to offer the consortium an opportunity to purchase Ubank.

In response to a formal letter of interest from Sekunjalo to acquire or recapitalise Ubank, the curator, KPMG, said they had been instructed by the South African Reserve Bank (SARB) to only sell Ubank to other banks.

“The Prudential Authority has advised the curator that, in the interest of the depositors of Ubank, and given the capital position of Ubank, the curator must undertake a bid process for the assets and liabilities of Ubank (in accordance with the provisions of section 54 of the Banks Act) and that only banks registered in terms of the Banks Act must be invited to bid for the assets and liabilities of Ubank, a substantial portion of which liabilities are deposits from the general public that can only be held by registered banks,” said KPMG’s Zola Beseti.

Sekunjalo had offered to immediately commit R250 million to Ubank’s recapitalisation and pledged to raise locally a further R250m. Sekunjalo would also be a minority shareholder within the proposed consortium, putting the interests of the people at the forefront.

Sekunjalo said it had written to the Governor of the SARB to clarify SARB’s position, who referred Sekunjalo back to the curator, in what could only be assumed was a pillar-to-post diversionary tactic. The decision to refuse the Sekunjalo Consortium’s bid to purchase or recapitalise Ubank also appears to conflict with certain provisions of Section 54 of the Banks Act – amalgamations, mergers and arrangements which allows for a person or an entity that is not a bank, to acquire bank assets in excess of 25% on condition that the Finance Minister has granted consent, and such consent is conveyed to the Registrar.

Sekunjalo chairperson Dr Iqbal Survé said: “Despite our best efforts to transform the banking sector and commit capital and resources to ensure that Ubank could be retained in the hands of workers such as NUM, it is patently clear SARB has no intention of allowing diversification of the banking industry.”

Beseti said if Sekunjalo did submit a binding offer to recapitalise Ubank, the curator would discuss such an offer with the SARB’s Prudential Authority and obtain its directives in relation to the offer. “Time is of the essence, and the intention is for the disposal process … to be concluded by August 31 this year.”

However, Sekunjalo said it had appointed Vunani Capital as its corporate finance adviser on the Ubank acquisition. “Vunani Capital has informed us that the curator’s position and SARB’s position is final in that they will not entertain an offer from Sekunjalo.”

He cautioned against allowing another black-owned bank to perish.

“It is our considered view that, as part of the transformation objectives in the financial services sector, the country should not lose a bank which is black-owned.

“By all accounts transformation in the financial services sector, especially in the banking sector, is regrettably low, and Ubank presents an opportunity to strengthen the inclusion of black people in the banking sector.”

National Union of Mineworkers general secretary William Mabapa said the curator had told the union and Mineral Council representatives that it intended to choose a bank, because that was the criteria. “I am sure there are (a lot of) people who have an interest… There may be more than 50. The criteria are that they are only going to choose among the banks; they are not going to choose anybody who comes with money,” said Mabapa.

The decision limits competition in the banking sector and further consolidates what is already a limited offering to South African consumers and businesses.

“While we appreciate that this is still ostensibly a free market and that the SARB can, to an extent, be selective as to who buys and operates Ubank, this disheartening decision to disallow a perfectly legitimate offer to save the bank continues to stall real transformation in the financial services industry. This is long overdue and essential to the future of our democracy and the inclusion of our people to make a meaningful contribution to the economy. We hope the curator and SARB rationalise and reconsider their position,” Sekunjalo said.

Outgoing commissioner for the Competition Commission Tembinkosi Bonakele recently raised concern about the commercial banks’ unwillingness to participate in diversifying the country’s economy.The Competition Commission’s Measuring Concentration and Participation in the South African Economy: Levels and Trends Report found that the banking sector was still dominated by “the big four”, namely Standard Bank, ABSA, FNB and Nedbank.