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Amendments have been proposed by the Treasury to the Banks Act to allow financially sound state-owned companies to apply for a banking licence.
The Treasury’s director of legislation Ailwei Mulaudzi briefed parliament’s standing committee on finance on Tuesday on the draft Financial Matters Amendment Bill, which contains the proposal.
While the EFF has proposed an amendment to the Banks Act to allow for the establishment of a state-owned bank, the ANC has also adopted a resolution supporting the establishment of a state-owned bank.
Mulaudzi noted in his presentation that under the Companies Act, state-owned entities (SOEs) are not classified as public companies, whereas the Banks Act only allows public companies to establish a bank. This prevented SOEs from establishing a bank, even when they meet the prudential and other requirements of the act.
Mulaudzi explained that the bill would only allow qualifying SOEs that were financially sound to apply for authorisation to establish a bank. This is to limit the fiscal risks of state-owned banks, which may, in terms of their founding legislation, be able to continue operating despite not being a going concern.
The bill proposes that the SOE must first obtain the approval of the finance minister, acting with the concurrence of the minister responsible for theSOE, to apply for authorisation to establish a bank.
The bill also stipulates that the assets of the SOE, its holding company and, if applicable, the holding company of its holding company, must exceed its ability.
Both the Treasury and the EFF’s bill will open the way for the Postbank to apply for a fully fledged banking licence provided it meets all the requirements of the Banks Act.
Currently the Postbank’s status as a state owned company precludes it from engaging in the full spread of banking activities.
Finance committee chairman Yunus Carrim stressed that other state owned banks could also be established.
ensorl@businesslive.co.za
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