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Nene: Co-op banks must change mindset

Johannesburg - Co-operative banks need to change their attitudes if they are to play a role in empowering South Africans, Deputy Finance Minister Nhlanhla Nene said on Thursday.

"We need to move away from this 'small mindset' we don't seem to be able to shake. We do not need lots of weak, small financial co-operatives," Nene said in Cape Town, according to a copy of his speech.

He was addressing the Co-operative Financial Institutions Indaba on the role of co-operative financial institutions.

Nene said such institutions - where the bank belongs to its members, who are also the customers - were an ideal model for communities to participate in their own deposit-taking financial institutions.

These could be geared towards their own needs, and in the process allow for empowerment and self-determination.

However, only Ditsobotla and OSK Co-operative Banks had been registered since the enactment of the Co-operative Banks Act, he said.

A further 15 institutions met the minimum registration requirements of R1m and 200 members, and were in various stages of the application process.

Together, the two registered banks and the 15 others had over 85% of the total assets in the sector.

Nene said the National Treasury knew of another 100 smaller co-operative financial institutions which held the other 15% of the sector's assets.

"It becomes a futile exercise to continue to register financial co-operatives that will end up small, redundant, or worse, lose member savings due to operational and governance weaknesses," he said.

Nene called for fewer, but larger and stable financial co-operatives.

The Treasury was offering a financial co-operative retail savings bond specifically for co-operative financial institutions, he said.

"These one year, two year and three year co-operative retail bonds will provide financial co-operatives with a safe instrument to invest and to earn a competitive return on their members' investments with no charges." 

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