SA banks launched a robust defence about access to credit for black South Africans and account closures, pushing back against this week’s fiery parliamentary session that thrust the roughly R8-trillion sector into the spotlight.
Speaking at the launch of the Banking Association SA’s (Basa’s) transformation report for 2024 on Wednesday, MD Bongiwe Kunene presented a detailed account of the progress of the sector — dominated by Standard Bank, Absa, FirstRand, Investec, Nedbank and Capitec — and compliance with legal standards regarding account closures.
“Already, banks’ financing of transformation and inclusive economic growth far exceed what is required of them by legislation and banks are likely to be able to do much more if there is a supportive operating environment for business and an expanding economy,” said Kunene.
The report, based on data from 20 banks, accounting for 96% of the total banking assets, was issued a day after banking and Basa executives faced scrutiny from MPs in a joint meeting of parliament’s trade industry and competition committee and standing committee on finance about their lending practices.
The banks underscored their glowing contributions to economic development and transformation at the meeting, rattling off figures for loans in various sectors — home, student, small businesses and broad-based BEE financing.
Yet, the MPs were not buying it, arguing that the transformation figures touted by Kunene did not exactly match the lived experiences of banking clients facing discrimination, differential interest rates based on race, and a sector still dominated by white executives.
“While every bank has its own business and risk criteria for extending home loans and other forms of credit — race is not one of them. Basa and its members are opposed to unfair discrimination of any kind. To date, no Basa member bank has been found guilty in a court of law of systemic or institutionalised racism,” Kunene said.
The transformation report, conducted by research an advisory group Krutham, shows overall black ownership amounted to 38%, surpassing a target of 25% in the amended Financial Sector Code. It also shows banks fell slightly short on directors, at 48% against a 50% target, while for junior, middle, senior and top managers it surpassed targets.
Kunene also held up the report’s finding that the sector doled out R337bn in empowerment financing in 2023, more than threefold the R130bn FSC target as evidence of its role in the economy’s transformation.
The government has a long-standing suspicion about banks’ lending practices. In August, then human settlement minister Mmamoloko Kubayi proposed changes to the Home Loan and Mortgage Disclosure Act that would pull back the curtain on patterns that have eluded public scrutiny. Data from the human settlements department reveal a convoluted picture: black people submitted twice as many applications for homes as white people but the approval rate for whites — at 60% — was higher.
“The racial inequalities in wealth and ownership in SA have their roots in apartheid,” Kunene said in the report.
Historical barriers — such as the exclusion of black, coloured and Indian communities from wealth accumulation under apartheid — have lasting effects on creditworthiness compared with whites, who had an easier ride in building wealth and assets, defenders of the industry have said.
Kunene also addressed concerns about allegations of arbitrary account closures. She said banks operate under stringent legal frameworks to prevent accounts from being used for nefarious activities.
“Banks have the right to close accounts to prevent them from being used for criminal activities. However, they must provide reasonable notice and comply with the conduct standard for banks and the code of banking practice. Each account closure is handled on its own merits, and the law is complied with fully,” she said.
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