Banking BEE body 'is dead'

Johannesburg - The banking sector wants to do away with the Financial Sector Charter Council.

This comes in the wake of the stalemate on legislative amendments to the Financial Charter that are being opposed by reade federation Cosatu for one. The charter in its current legislative form is dead, it was said on Wednesday.

Banking Association CEO Cas Coovadia says reality has to be faced, but the terms of the charter can still play an important complementary role in existing legislation and the codes of the Department of Trade & Industry.

The association represents all major financial institutions, including the four big banks - Absa, First National Bank in FirstRand, Nedbank and Standard Bank.

The Financial Charter is supposed to monitor banks' empowerment progress in terms of the charter's provisions, but has recently been snarled up in disputes and inefficiency. The council has not met once this year.

Several banks are dissatisfied with the council's role because important feedback is not being given on empowerment targets. There is uncertainty as to whether it is necessary to comply with the charter's targets or with the codes.

This has led to delay in the announcement of empowerment statistics at financial institutions.

Coovadia published his own figures on Wednesday. Junior black managers at banks currently make up 53.67%, compared with the 40% target. Senior black managers comprise 25.79%, compared with the required 40%.

Targets not being achieved include the funding of infrastructure to the tune of R7.9bn, compared with the target of R25bn. Coovadia lays the blame with black management at municipalities and not banks, which are willing to advance money.

In August a meeting was held between the banking Association, Minister of Finance Pravin Gordhan and Minister of Trade and Industry Dr Rob Davies to discuss the Council stalemate. All previous attempts to settle council disputes, including those by Trevor Manuel, head of the National Planning Commission, have failed.

According to Coovadia, Gordhan and Davies have asked for the council to be given another chance.

The most important point of difference within the council is that of banks' direct and indirect empowerment stakes. The charter requires a direct 10% ownership and a 15% indirect one.

The codes, with the support of the council, require 15% direct and 10% indirect.

This has been the only issue to prevent promulgation of the charter as law, Coovadia emphasised.

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