Black banks are as essential today as they have ever been
2016. According to Sarb’s 2016 figures, the banking sub-sector manages R4.8 trillion in assets, or about 112 percent of the country’s GDP, and has 16 local banks (from 40 in 1994), 15 local branches of foreign banks, 36 representative offices of foreign banks, two co-operative banks and two mutual banks.
However, the “big four” banks, Absa, Standard Bank, Nedbank and FirstRand, account for more than 80 percent of the total banking sub-sector assets and market, controlling assets of R4.87 trillion, which amounted to 112 percent of the country’s GDP.
The market share of banks by assets as at January 2017 was 24.92 percent – Standard Bank; 20.51 percent – FirstRand; 19.3 percent – Absa; 17.7 percent – Nedbank; 8.02 percent – Investec; 1.46 percent – Capitec Bank and 8.09 percent – other banks. The top six banks control more than 90 percent of market share by assets, while the “big four” banks control more than 80 percent.
Of course, we all know how the African Bank and VBS banks have become the poster children of all that is wrong with unfettered lending.
The woes of these banks still represent a tough challenge for the financial regulators as they now must work to reassure depositors and investors and restore confidence in one of the country’s key lenders.
The above background, together with real and perceived high prices for banking services and products, has raised serious concerns about the need for competition in South Africa’s banking sub-sector.
That is why we at the Association of Black Securities and Investment Professionals (Absip) believe that given the scale and depth of South Africa’s problems, banks can and should do more to contribute to transformation, growth and development, looking hardest at investment in job-intensive sectors, small and medium enterprises (SMEs) financing, co-operative financing, infrastructure and agriculture.
With the above background, who then can argue that we don’t need black banks?
The role of black banks or a black bank would be to service black communities, make sure blacks receive lending to buy their first home, send their children to university and start their own businesses.
Black banks will be sensitive to the needs of black communities and will do a better job of informing and educating the black communities about banking and credit because too many of our people do not have good, banking knowledge.
There is now a greater need for more black banks, which can have close relationships with black customers and cater to their banking needs.
Blacks have to learn to own their own. If we’re talking about economic development and economic empowerment, we have to come in and we have to have a powerful black bank or banks.
A black bank (or banks) is as essential today as they have ever been.
If there are no black-owned banks, blacks will remain at the periphery of economic power, hence there has to be a deliberate government and SA Reserve Bank policy position to help licence black banks.