South African banking fee concerns

Some of South Africa’s biggest banks will be called to appear before Parliament in early 2025 to address concerns over their service fees, unreasonable policies and the extension of credit.

This was revealed in a media engagement with the four chairpersons of the National Assembly oversight committees belonging to the Economics Cluster.

Parliament’s Trade, Industry and Competition Committee chairperson, Mzwandile Masina, said the committee has had an opportunity to review South Africa’s financial sector, with a particular focus on the banking sector.

“One critical issue we raised – and we hope to address in the next quarter – is the need to call some of South Africa’s major banks to appear before the committee,” he said. 

He said that, following a joint meeting with the National Treasury, the committee’s assessment is that while consumption credit is readily available in South Africa, credit for creating a business creation and productive funding is not.

In addition, he said South African banks often implement unilateral policies that seem unreasonable. 

“We need to hold them accountable, including for the charges imposed on individuals and government,” Masina said. 

He added that banks in South Africa have significant autonomy, often deciding without clear justification to open or close accounts, determine interest rates, and allocate credit. 

He said this creates opportunities for inefficiencies and inequities. 

Masina pointed out that other major economies worldwide have multiple banking institutions, unlike South Africa, where a handful of players dominate.

“We really will have to find a mechanism in which we can find each other on how best we can move South Africa forward because the cooperation of the financial sector is important if we are to grow the economy of South Africa,” he said.

“So, they will be appearing before us so that we can then have a conversation in terms of what are the areas that need to be tightened so that we are able to make progress in this regard.”

In the committee’s engagements with the Portfolio Committee and National Treasury, they identified the big five banks – Standard Bank, FNB, Absa, Nedbank, and Investec – as key players to call.

Beyond these, he said the committee is also considering banks like Capitec, African Bank, Bidvest Bank, and Grindrod Bank. 

Masina said the exact mechanism to make this happen will be finalised to ensure they appear in the next quarter for these discussions.

Postbank

In the media engagement, Masina also spoke about the future of South Africa’s state bank, Postbank.

He said the committee fully supports Postbank as an existing state bank. 

However, he said they must explore mechanisms to enhance its functionality, particularly by ensuring better support from the state and its agencies. 

This would enable Postbank to serve as a reliable, accessible bank for the people of South Africa.

Finance Minister Enoch Godongwana also recently said that progress is being made in creating a state bank, and Postbank will play a key role in this regard.

This followed a big development in March 2024, when President Cyril Ramaphosa enacted the new South African Postbank Amendment Act.

This Act officially transferred Postbank’s shareholding from the struggling South African Post Office to the government.

This change enables the establishment of a Bank Controlling Company, the new holding entity for a bank.

It paves the way for Postbank to evolve into a fully-fledged state-owned banking operation in the country.

Historically, Postbank offered limited banking services through the Post Office, focusing solely on savings.

It could not provide transactional accounts, credit, and other banking services, which many argue would help lower-income citizens.

With the Postbank Amendment Act in effect, Postbank can proceed as a state-owned entity independent of the Post Office.

It is applying for a new banking license from the South African Reserve Bank to initiate full banking operations.