An analysis of the contentious Expropriation Act conducted by Standard Bank has concluded that the legislation does not threaten property rights.
Group CEO Sim Tshabalala said the application of the controversial law would not change the banking giant's lending policy or risk appetite.
“This analysis includes a consideration of the state of property rights in South Africa, the risk that they might deteriorate and the possible causes and consequences of that hypothetical deterioration. In the context of South Africa’s gold standard constitution and bill of rights, and our deeply entrenched rule of law, we have concluded that the Expropriation Act of 2024 does not weaken property rights in South Africa, nor does it weaken the sanctity of contract,” he said.
He cited a report compiled by Werksmans Attorneys which said expropriation without compensation, as provided for in the act, would be applicable in limited circumstances.
“Any hypothetical expropriation with or without compensation will be subject to judicial review on grounds including constitutionality, rationality, fairness and the public interest. In summary, on land expropriation, it is reasonable to conclude the new Expropriation Act does not warrant any modification to our lending policy or risk appetite,” he said.
US President Donald Trump, in a post on his Truth Social account in February, accused South Africa of confiscating land belonging to white farmers.
“South Africa is confiscating land, and treating certain classes of people VERY BADLY,” Trump wrote. “The United States won’t stand for it, we will act. Also, I will be cutting off all future funding to South Africa until a full investigation of this situation has been completed!”
He followed the threat with an executive order titled: "Addressing Egregious Actions of the Republic of South Africa", which cut off aid to the country in response to the allegations. His administration later froze aid for HIV/Aids organisations across the country.
Promulgation of the Expropriation Act has also divided the government of national unity, with the DA challenging aspects of it in court.
This week, the US state department said it was working with the department of homeland security to implement the executive order on resettlement of Afrikaaners.
“Consistent with President Trump’s executive order on addressing egregious actions of the Republic of South Africa, the US department of state is co-ordinating with the department of homeland security and implementing partners to consider eligibility for US refugee resettlement for disfavoured ethnic minority Afrikaners in South Africa who are victims of unjust racial discrimination.”
We bank a large number of American corporations operating in South Africa and the African continent. They include all the major names you can think of. We know there are about 600 American corporations in South Africa, and they employ a large number of people. Those companies continue to do business. We continue to facilitate their payments; whether it be payroll, borrowings, transactions or hedging and so forth.
— Sim Tshabalala, Standard Bank Group CEO
Tshabalala said despite the heightened rhetoric and souring of relations, there was no evidence of a reduction in economic activity between the two countries.
Speaking at the release of the bank’s financial results for 2024 on Thursday, he said the trade flow remained uninterrupted and US businesses with a presence in South Africa continued to operate.
“We bank a large number of American corporations operating in South Africa and the African continent. They include all the major names you can think of. We know there are about 600 American corporations in South Africa, and they employ a large number of people. Those companies continue to do business. We continue to facilitate their payments; whether it be payroll, borrowings, transactions or hedging and so forth,” he said.
Tshabalala said South African financial institutions, including Standard Bank, complied with domestic laws in all the jurisdictions they operated in and with international public law, including sanctions, money laundering and norms, and related laws.
He expressed confidence that the country would be removed from the greylist by the Financial Action Task Force (FATF) due to progress made by the government and business in addressing outstanding actions.
“Thanks to a successful programme of reforms, and more prosecutions now under way, there is a high probability South Africa will leave the FATF greylist in October this year.”
Last month, FATF upgraded four of the six outstanding actions South Africa must undertake to be removed from the greylist.
Asked if he was concerned that tensions with the US could see South Africa kicked out of the African Growth and Opportunity Act, Tshabalala said the movement of goods and people must be encouraged.
“I can tell you what is needed for prosperity. We need fewer trade barriers, more movement of people, a lower cost of capital, a more conducive environment in South Africa to do business and we need to make it easier for people to visit our continent,” he said.
Standard Bank reported that headline earnings had climbed 4% to R44.5bn, while the dividend was up 6% at R7.63c a share. It also reported a return on equity of 18.5%, underscoring continued balance sheet growth and lower credit impairment charges.
Its local operations, underpinned by a strong performance by the insurance business, grew earnings 12.5% to about R22bn. The bank said active clients grew by 4% to 20-million, thanks to growth in South Africa, where digitally active retail clients grew by 6% as more people transitioned to digital channels.
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