Government’s aspirations for the Postbank to be a lever for financial inclusion still have a while to go, as the banking institution is “not yet in a position to be granted a licence”.
This was revealed by president Cyril Ramaphosa, during his appearance before the National Assembly this week.
Postbank is one of the 11 entities under the Department of Communications and Digital Technologies (DCDT) portfolio, with the state looking to the entity to play a crucial role in the economic transformation of SA.
Postbank does not yet offer mainstream banking products as it is not yet a registered bank, so a banking licence will allow the institution to operate as a fully-fledged, state-owned bank.
During the president’s appearance, ANC Member of Parliament Mdumiseni Ntuli asked what measures government is taking to support the Postbank in obtaining its commercial banking licence and whether government has established the need to capitalise the institution.
“According to the minister [Solly Malatsi], Postbank has not yet fully met the conditions for a banking licence, particularly around its card key management processes and compliance with prudential standards,” said Ramaphosa.
“Its immediate challenge is to strengthen its governance, ensure compliance with prudential standards and stabilise its finances.”
Given government’s poor track record of running state-owned enterprises such as Eskom, Transnet and South African Airways, among others, questions have been raised as to how government would efficiently run a state bank.
Postbank suffered a cyber attack in the last quarter of 2021, resulting in a financial loss of approximately R77 million, according to reports.
Despite a challenged history, in May 2022, the DCDT moved ahead and tabled the South African Postbank Amendment Bill to the National Assembly, bringing government’s plans to transition the Postbank into a full-service bank a step closer.
The Bill, tabled by former communications minister Khumbudzo Ntshavheni, would add and amend definitions in the South African Postbank Act, to allow the Postbank to function as a separate entity to the South African Post Office (SAPO).
The Bill would pave a way for the setting up of a Bank Controlling Company, which would serve as a holding company for the bank, and the shareholding of Postbank to be transferred from SAPO to government.
Ramaphosa reiterated that government remains committed to supporting the Postbank to obtain its licence, as it is meant to extend affordable banking services to underserved communities, small businesses, and youth- and women-owned enterprises.
“When more South Africans, especially those in rural and underserved communities, are able to access affordable banking and credit, we unlock entrepreneurship, support job creation and stimulate growth in local economies.
“Financial inclusion also empowers youth- and women-owned enterprises, narrows inequality and builds resilience in households and communities,” he said.
The president explained that SA has a well-developed and competitive financial services sector, and its commercial banks, development finance institutions, co-operative banks and new digital entrants all provide a range of financial products and services to small businesses and individuals.
“The Postbank Amendment Act was enacted to strengthen the diversity of our financial sector and ensure a dedicated focus on underserved communities.
“The Act was meant to establish Postbank as a developmental state-owned commercial bank, offering accessible financial services to all South Africans,” he said.
The president further explained that while capitalisation will be considered, it will only take place after Postbank has been granted authorisation to establish a bank. Once authorisation is secured, the institution will have 12 months to raise the necessary funding to be registered as a bank.
He revealed this will be determined by its business case, for which the Postbank board is responsible, and submitting that business case to government via the minister of communications and digital technologies.
“These steps are essential to ensure that Postbank obtains its banking licence and is able to fulfil the vital mandate that it bears to promote financial inclusion for all,” said Ramaphosa.
Further elaborating on the matter, the president stated that government will not rule out the possibility of bringing together African Bank and Postbank as part of establishing a state bank.
Ramaphosa told MPs that all available assets may need to be leveraged to extend banking services to South Africa’s unbanked population.
“There is a general agreement that we need a state bank. The key question is how we move forward to put a bank together, and how we put all key elements together − whether it resides in Postbank or whether African Bank could be part of it.
“We must remind ourselves that African Bank has other shareholders who aren't state entities. All those entities need to be synchronised to create a state bank.”
Share