Banks Amendment Bill: briefing

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Finance Standing Committee

30 March 2003
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Meeting report

FINANCE PORTFOLIO COMMITTEE
31 March 2003
BANKS AMENDMENT BILL: BRIEFING


Chairperson: Ms Hogan (ANC)

Documents handed out:
Treasury presentation on Banks Amendment Bill
South African Reserve Bank (SARB) presentation
Banks Amendment Bill [B15-2003] PDF format

 

Relevant document:
Business Day news article 26 March 2003:
Reasons for Saambou's failure to stay secret
Business Day news article 28 March 2003:
Bank defends keeping a lid on Saambou report


SUMMARY
Treasury and the South African Reserve Bank gave a briefing on the Banks Amendment Bill. Most of the questions touched on the unfinished Saambou Report and aspects of corporate governance. The proposed amendments were mainly to do with clearing the Act of any gender discrimination.

MINUTES
Ms Hogan read a statement by the Registrar of Banks stating that the Saambou Report was not finished and had no bearing on this Bill.

Ms Taljaard (DA) commented that the Saambou Report was a corporate governance report and was generically linked to this bill and she proposed looking at it under embargo.

The Chair said that she will discuss this matter with the Speaker of Parliament.

Treasury presentation on Banks Amendment Bill
Mr Mashiya (Treasury Director: Banking Development) briefed the Committee (see document).

Ms Taljaard asked to which "recent bank failures" was the presentation referring to in providing a rationale for the amendments. Was it the Saambou Bank failure?

Adv Blackbeard (SARB) replied that it was the failure of Regal Treasury Private Bank.

South African Reserve Bank (SARB) presentation
Mr Moloto enquired after the rationale behind the rotation of auditors. Are there any standard reporting requirements for banks?

Mr Blackbeard replied that these are international standards because of the reliance on auditors. They have to be sure the auditors are independent and accurate. This is also a reaction to the corporate scandals in the United States.

Mr Lekgoro asked if there is any special mechanism to ensure that the rotation is not superficial.

Mr Blackbeard answered that the details have not yet been worked out. They need the enabling legislation to go to the industry to work out the details.

Ms Taljaard commented that she would like to see the Memorandum of Understanding between the Registrar and the Competition Commission. There were clear irregularities in Saambou's salary incentive schemes. Why not take these issues forward in this bill instead of waiting two more years like in the case of Regal Bank.

Dr De Jager (SARB, Legal advisor) commented that the Saambou matter was not completed and therefore no conclusions could be drawn.

The Chair asked how Regal customers would have been affected if this legislation was in effect.

Dr De Jager replied that it would have enabled investors to get their money back and take legal action against board members individually or as a group.

Ms Joemat raised her concern over the powers of the Registrar. She asked whether there had been warning signs in the cases of Saambou and Regal. She wondered whether the registrar had the capacity to deal with these powers.

Mr Blackbeard replied that there were warning signs. The Registrar's powers and capacity were not there however. In Regal's case it was a dominant chief executive officer who had made all the decisions. In that case such powers would have resulted in an earlier exit of the CEO.

Dr Woods commented on the planned risk committees for every bank. He asked whether they would overlap with the audit committees and to whom they would report.

Mr Blackbeard replied that they report to the banks. Most banks already have such a committee. This is another corporate governance yardstick.

There were no further questions and the meeting was adjourned.

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