Hostility, robust debate expected in bank transformation hearings

Cape Town – The public hearings at Parliament’s Standing Committee on Finance concerning financial sector transformation are expected to be robust and hostile, key industry players said ahead of the hearings on Tuesday.

The committee invited members of the public and stakeholders to make comments on the transformation of the financial sector. "This will include a focus on its deracialisation, high level of monopoly, progress on implementation of the Financial Sector Charter and other related matters," the invite read.

Bank representatives expected to appear in Parliament on Tuesday include those of Barclays, FirstRand, Standard Bank and the Banking Association of South Africa (BASA). Nedbank is expected to deliver its comments on March 22.

The Black Business Council’s Mzwanele Manyi, who has been a controversial voice on radical economic transformation, is also expected to make a presentation on Tuesday.

The following three stakeholders shared comments with Fin24 on how they expect the proceedings to unfold:

• BASA MD Cas Coovadia is expecting a hostile reception.
  
• Standing Committee on Finance co-chairperson Yunus Carrim thinks the hearing will be as robust as other hearings on similar topics, but not hostile.
  
• Democratic Alliance MP David Maynier fears the hearings will go down as the first radical economic transformation “show trial” in Parliament.

Start developing a different narrative

In an engagement with Media24 editors on Monday, Coovadia said BASA is “a bit concerned about the noise regarding these hearings”.

“There is a whole lot of noise that is not factual, but it gets out into the public space,” he said. “We are quite honestly expecting a hostile reception tomorrow."

Coovadia intends addressing the role banks should be playing in the national interest.

"BASA's role is to protect the industry and bolster appropriate regulation around the industry so that its systems and world class infrastructure are not used for nefarious purposes," he said.

Consensual decision making

Carrim told Fin24 on Monday that “public hearings these days are often robust” and that “this will be no different. It won’t be any more robust than the norm. The task of the two chairpersons is to ensure that the hearings are conducted to provide a conducive, productive exchange of views,” he said.

“More importantly, we will ensure there is consensual decision making towards greater transformation in the financial sector, which is crucial to inclusive economic growth and development that we all have a different share in.”

In total, there will be 55 submissions at the hearings from members of the public, who represent banks, organisations and associations.

Regaining lost support

Maynier raised concern on Monday that African National Congress MPs would use the opportunity to “establish their radical economic transformation credentials” in the party's bid to reclaim popularity among voters.

The focus on radical economic transformation is seen as the ruling party’s attempt to regain support lost to the Economic Freedom Front led by Julius Malema. This follows the ANC’s electoral loss of Tshwane and the City of Johannesburg in last year’s local government elections.

Briefing the media on the ANC’s policy documents on Sunday, head of policy and Minister in the Presidency Jeff Radebe said: "At the heart of the discussion document remains the ANC's call for the second phase of the National Democratic Revolution that requires a more intense focus on the full radical economic transformation of our democracy.”

Financial Sector Summit

The hearings should not be seen in isolation to the planned Financial Sector Summit, Carrim said.

Both Carrim and Coovadia pointed to the summit Finance Minister Pravin Gordhan referred to in his Budget Speech in February.

Here, Gordhan said Treasury “will work with partners at Nedlac who have requested that a Financial Sector Summit take place in 2017 to consider transformation in this sector”.

The summit may be used to review the Financial Sector Code, which was last gazetted by Trade and Industry Minister Rob Davies in March 2016.

Coovadia said the industry has done well to comply with the financial charter, but said there are still problems that need to be addressed. “It requires a sensible and pragmatic conversation about how we deal with those issues,” he said.

Transforming the banking sector

Coovadia doesn’t want transformation to result in the “enrichment of a few”, but rather to focus on bringing black people into the economy with help from the banks.

“My measurement will be how many black people are using the banking systems to transact and get into the economy,” he said. “We need to change the narrative of transformation: is it the enrichment of a few or the inclusion of the majority?”

Coovadia said the banking industry is traditionally quite reluctant to speak in the public space.

“In the current space, the narrative is being driven by people who don’t understand how banks work,” he said. “They seem to have an agenda that is consistently attacking the industry.

“We need to reposition the industry and introduce a narrative that is critical when we need to be of the industry, but also speaks about the role banks play.”