File Ref : 36396

hearing on Co-operative Banks Bill


1.                      The Banking Association South Africa thanks the Portfolio Committee on Finance for inviting us to make a submission on this matter, and we welcome the opportunity to support this Bill. We will talk to this submission during the slot we have requested for an oral submission.

2.                      We have made several submissions to National Treasury, responding to various drafts of the Bill, before it being considered by the committee today.

3.                      The Financial Sector Charter states, inter alia, that

“The regulatory environment and architecture of the sector must promote the empowerment objectives of this charter, lower the barriers to entry and facilitate competition”

“The financial sector’s support for the development of second and third tier financial institutions may take, but shall not be limited to taking, the form of measures set out in paragraphs 7.11 and 7.2” (These paragraphs refer to skills transfer, staff secondments, infrastructure support, technical and administrative support and referral of business.)

4.                      The Banking Association South Africa is a signatory to the Financial Sector Charter, and its members are committed to the intent and deliverables agreed in the Charter.

5.                      The Banking Association South Africa has thus supported the development of the Co-operative Banks Bill and we commit ourselves to ongoing engagement with National Treasury and your committee to refine the Bill, where necessary, on its path to promulgation as an Act.

6.                      We remain convinced that co-operative banks can play an important role in delivering financial services to particular sectors of the broad market. We believe these institutions, if appropriately governed and regulated, can fulfil their role in partnership with registered banks.




7.                      We have raised with National Treasury that potential co-operative banks will have to be compliant, in internationally-accepted form, with FICA regulations targeting money laundering and the financing of terrorism. This aspect is not dealt with in the Bill. However, we have been assured the intention is that co-operative banks will be FICA compliant, and that this will be addressed through regulations or any necessary statutory amendment. We believe it is critical for this matter to be addressed because FICA compliance will be an important factor in promoting partnerships between co-operative banks and banks registered under the Banks Act.

8.                      In conclusion, we reiterate that this Bill is an important step in the diversification of the financial sector and should make a contribution to the broadening of access to financial services to markets that don’t have access currently. Successful co-operative banks will also add value to some sectors of the market that have access to some degree of services at the moment.

9.                      We support this Bill.