Johannesburg - The massive salaries earned by the heads of South African banks will certainly come up for discussion on Monday afternoon when the Finance Minister, together with the chief executives and chairs of South Africa's major banks, assemble.
Last month Pravin Gordhan sharply criticised the massive gaps between the salaries of chief executives and other workers.
Lofty remuneration packages create a dangerous precedent and merely widen the gap between the rich and the poor, he said, and proposed a national debate in that regard.
In his budget speech Gordhan said that he wanted to speak with the banking bosses about this, and Treasury confirmed that it would be one of the discussion points on Monday afternoon.
Treasury said that banks’ salary practices and incentive schemes would be on the table.
The meeting come just at the point where banking executives’ pay was again in the spotlight.
A proposal that a R7.5m retirement package should be given to Derek Cooper, Standard Bank’s departing chairperson, gave rise to a great deal of opposition at the bank's annual meeting.
The proposal was eventually supported by 57% of the shareholders, while 40% voted against it – an unusual phenomenon at a South African annual general meeting where these types of proposal are generally accepted without protest.
Large institutional shareholders like Old Mutual, Sanlam and the Public Investment Corporation voted against the motion.
In an investigation done by Phillip Theunissen of Computus, a group of forensic auditors, chief executives of South African banks were found to earn an average of R10.3m.
Tom Boardman, who recently retired as head of Nedbank, earned R43m in the past year.
In response to this report Gordhan told parliament that the remuneration committees of large groups needed a shakeup before they would change their views.
But last week Errol Kruger, the Registrar of Banks, said the Reserve Bank was and had been regularly monitoring what South Africa's banking heads were earning to make sure that this was not as excessive as it was in other countries
In an interview with Sake24.com, he made it clear that he was satisfied with the current state of affairs.
On Monday the banking heads will also have to explain to Gordhan why so little progress has been made in establishing the Competition Commission’s recommendation to raise competition in the sector.
The report’s recommendations had already been announced in December 2008.
Discussion is also necessary on the need for stricter regulation, trends in credit advancement and the transformation of the sector.
The financial sector charter, on which consensus cannot be reached, will also be discussed.
- Sake24.com
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