Big banks laud transformation triumphs

Cape Town – South Africa’s three big banks, Barclays Africa Group, FirstRand and Standard Bank were all showcasing their transformational efforts in Parliament on Tuesday.
 
The submissions made by Barclays Africa CEO Maria Ramos, Johan Burger of FirstRand and Sim Tshabalala of Standard Bank formed part of public hearings hosted by Parliament’s finance and trade and industry committees on transformation in the financial sector.
 
Ramos said financial inclusion, enterprise development and education are the three pillars upon which Barclays, which operates as Absa in South Africa, are basing its operations.
 
She said Absa’s BBBEE contribution status improved from level 3 in 2015 to level 2 in 2016.
 
“In 2004, we were the first of the major banks to allocate 10% ownership to black partners through the Batho Bonke Empowerment Consortium,” Ramos said. “The deal was unwound partly in 2009 and fully in 2012, after the consortium sold their equity.”
 
She emphasised though that Absa intends to conclude another BEE transaction to which Barclays has already committed about 1.5% of Barclays Africa market capitalisation as at December 31 2016.
 
Asked by EFF MP Floyd Shivambu how much total black ownership at Barclays Africa constitute she said “just over 6%”.
 
“But let me be clear: we were the first bank to do a BEE deal which matured in 2012 when the owners of that deal sold (their shares). As Barclays PLC divests we have negotiated an opportunity to do another deal,” Ramos said.

Johan Burger, CEO of FirstRand, said in his submission that MPs need to understand that the banking sector is the custodian of the savings of South Africans.

“We must ensure the safeness and soundness of the institution. We don’t make the rules – we play by them.”

Dealing with the ownership imperative, Burger said that the FirstRand BEE deal resulted in R23.5bn of value transfer to a broad base of black shareholders. FirstRand’s black ownership amounts to 36.5% of the group,  which Burger said represented a real commitment to transformation.

Burger pointed out that a commercially sound and profitable banking system remained a non-negotiable for the country.

“Examples from around the world have demonstrated the devastation that results from banking crises: job losses, recession and social unrest have all played out throughout the world following the global financial crisis,” he warned.

“Maintaining a sound banking system whilst driving transformation and inclusivity are fundamentally complimentary objectives and the achievement of the latter will continue to accelerate on the back of a strong economy”.

Standard Bank’s Tshabalala said in his submission that in 2004 over 6 000 black employees at the bank received shares in the institution, which amounted to R3.1bn after debt worth of shares as at December 2014.

“All these beneficiaries could remain in the share scheme, but most of them decided to sell,” Tshabalala said.

He said although banks have been criticised for not lending money to small businesses in case they don’t honour the repayment obligations, Standard Bank went ahead and lent more than R500m to small black enterprises.

“We did this while keeping within our risk limits,” Tshabalala said.

He also said the banking industry can only declare victory on transformation when the needs and burdens are shared to reflect the demographics of SA.

As one of the bank’s other transformation efforts he listed the Industrial and Commercial Bank of China as Standard Bank's biggest shareholder.