Postbank Limited Amendment Bill: public hearings; with Minister

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Communications and Digital Technologies

25 October 2022
Chairperson: Mr B Maneli (ANC)
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Meeting Summary

The Committee met virtually to hold public hearings on the South African Post Bank Ltd Amendment Bill from the Ombudsman for Banking Services, the Congress of South African Trade Unions (Cosatu), the Banking Association of South Africa (BASA), Right2Know and the Financial Services Conduct Authority (FSCA).

The Bill seeks to amend the South African Postbank Limited Act of 2010 to provide for the transfer of its shareholding from the South African Post Office SOC Limited to government, and the creation of a bank controlling company for the Postbank SOC Limited in terms of the Banks Act of 1990.

All stakeholders unanimously supported the Bill. The entities provided inputs for the Committee’s consideration of provisions that would need to be strengthened or tightened up. One of those provisions was a revision of the Minister’s powers, as it was felt that the Minister would have absolute and too much power. It was thus proposed that the Postbank should have its own board and executive management, or that the power of the Minister be shared with the board of the Postbank. This was one of the areas of concern for Members. They were also unanimous that the National Treasury and the Standing Committee on Finance ought to be part of these engagements. Though Postbank reported to the Committee, the suggestion was welcomed.

Some of the Members were concerned about the separation of Postbank from SAPO. Though over 170 branches of SAPO had been closed in different areas, Postbank could still utilise its infrastructure. The separation of the two institutions resulted from the recommendations of the Prudential Authority and/or the South African Reserve Bank. If the Postbank was to be licensed as a bank, it must be separated from the Post Office to fully comply with the Banking Act. Even in the Bill, it was clarified that the Postbank would ride on the infrastructure of the Post Office. The Minister assured the Members that the infrastructure would still be shared. A strategy would be developed on how the Postbank would leverage that infrastructure to ensure that the Post Office infrastructure did not collapse as the Postbank utilised it.

Meeting report

The Chairperson was experiencing connectivity issues and was unable to open the meeting. Ms N Kubheka (ANC) stood in for the Chairperson while they were resolving his connectivity issues.

Ms D Kohler-Barnard (DA) said she had difficulty determining why the Bill had been referred to this Committee. She believed that the Bill fell under finance, so why was it dealing with this Bill? Was finance also going to be part of this process, because Members of this Committee did not have the financial expertise?

Ms Kubheka said that the Post Bank was under the South African Post Office (SAPO), which reports to the Department of Communication and Digital Technologies. The Committee had not met with the Finance Committee to discuss matters pertaining to this Bill; however, nothing was stopping the Committee from engaging with it where it was necessary. This Bill was not changing everything, but amending certain clauses.

Submissions on South African Post Bank Ltd Amendment Bill

Ombudsman for Banking Services

Ms Reana Steyn, Chief Executive Officer, Ombudsman for Banking Services (OBS), said that the Postbank was a member of the OBS through its membership with the Banking Association of South Africa (BASA). They had recently seen an uptake in the complaints received. They did not view this in a negative light and rather welcomed the fact that the customers of the bank were aware of their rights and options when they had disputes. 

The OBS was fully supportive of the Bill, and they hoped the process would be finalised as soon as possible to enable the Postbank to successfully serve the larger South African banking population. They undertook to do everything in their power to assist the bank on its journey, and they were open to engaging with the OBS and accepting the knowledge they had gained through resolving banking disputes for more than 21 years.

However, there may be many challenges, and these bear special mention:
Compliance with the National Credit Act (NCA) requirements on lending;
Employing skilled staff;
Embracing the principles set out in the Conduct Standard for Banks, and treating customers fairly in all aspects of the banker/customer relationship

See submission for further details


Mr Joel Mhlongo, National Working Group, Right2Know, made the organisation's submission.

He said the words “members of the Board are appointed or re-appointed by the Minister, with the concurrence of the Minister of Finance”, must be replaced by the words "the members of the Board must be appointed or re-appointed by the selection committee in concurrence with the Minister, in consultation with the Minister of Finance". Secondly, where it states the board must appoint a (managing director) Chief Executive Officer… the words “with the approval of the Minister” must be removed. Thirdly, with reference to the board, the words “with the concurrence of the Minister” must be removed.

Lastly, the board must invite applications… the words “with the concurrence of the Minister” must be removed.

See submission for further details

Banking Association SA (BASA)

Mr Benjamin April, General Manager: Prudential Division, BASA, said the Postbank had been a member of BASA since January 2020 and had been engaging with BASA on matters relating to banking and participating in their committees for a few years prior to their membership. It was therefore unusual for BASA to comment directly on the operating model of their members. However, as this was a bill before Parliament, they would make some broad observations supporting its passage.

The Postbank had been operating as a bank in South Africa, under an exemption notice from the Prudential Authority for many years. This meant that it had been permitted to accept deposits as a bank, but without the reporting obligation to the South African Reserve Bank (SARB) as the regulator and supervisor of banks. The Postbank, as a state-owned entity (SOE), had been working towards achieving a full banking licence for many years, and this Bill would provide much-needed impetus to their journey.

The board must exercise control over the company. The board of the bank controlling company shall be the same as the one serving the company. We would suggest that the composition of the board of the bank controlling company be materially different to the board of the bank. In this regard, "material" would mean more than 50% of the board of the controlling company would not be board members of the bank. The envisaged shareholder oversight would require the ability of the board members of the controlling company to challenge the board of the bank.

In conclusion, as one of their members, they wanted to see Postbank succeed and compete openly in the banking industry. The Prudential Authority would provide the necessary oversight to ensure that depositors would be protected and, together with many other regulators, would apply a prudent approach to deposit taking and lending as collectively they ensured that "other people's money" entrusted to the Postbank could be repaid on time and in full.

They welcomed the expeditious conclusion of this Bill so that Postbank could begin building its brand amongst the citizens.

See submission for further details

Financial Services Conduct Authority (FSCA)

Ms Retha Stander, Senior Legislation Manager, FSCA, said the entity supported the Amendment Bill and its purpose, namely, for the Postbank to become licensed as a bank in terms of the Banks Act, No. 94 of 1990. The FSCA appreciated the broader objective of the South African Postbank Limited Act, No. 9 of 2010 (Postbank Act) to promote financial inclusion by expanding the range of banking services to rural and lower-income markets. 

It was noted that sections 2(b) and 2(g) of the Amendment Bill expand the aims of the Postbank to include the rendering of “financial services.” There was, however, no definition of “financial services” provided for in either the Postbank Act or the Amendment Bill. It must be highlighted that the Financial Sector Regulation (FSR) Act contains a comprehensive definition of “financial services”, which includes a broad range of financial sector activities beyond banking. In addition, “financial services” was defined in the well-established Financial Advisory and Intermediary Services Act, No. 37 of 2002 (FAIS Act). This FAIS Act requires any person rendering financial services to be authorised by the FSCA as a financial services provider. The FAIS Act would be repealed and replaced by the Conduct of Financial Institutions (CoFI) Act when the CoFI Bill was passed. 

The FSCA proposed that, if it was not the legislative intent to bring the activities of the Postbank within the ambit of either the FAIS Act or the FSR Act, the reference to “financial services” be deleted from the Bill to avoid future uncertainty or unintended regulatory consequences for the Postbank. 

However, if it was intended for the Postbank to render financial services as defined in either the FAIS Act or the FSR Act, it would be advisable to include a clear definition of “financial services” in the Amendment Bill. It was noted that “the business of a bank” was defined in the Postbank Act with reference to the Banks Act. Similarly, a definition of “financial services” could possibly be included with reference to either the FAIS Act or the FSR Act, depending on the type and range of financial services envisaged to be rendered by the Postbank. 

See submission for further details


Mr Matthew Parks, Parliamentary Coordinator: Congress of South African Trade Unions (Cosatu) took Members through the presentation and said Cosatu welcomed and supported the South African Post Bank Amendment Bill as tabled in Parliament. It believed it would revive and capacitate the Postbank; position it as an alternative to poor and disadvantaged customers and communities; inject badly needed competition into the banking and financial sector; support the state’s developmental mandate, and provide a path for the revival of the South African Post Office itself.

Cosatu went on to explain why it supported the Bill.

See submission for further details

In conclusion, the Postbank would require some support from the state and public entities if it is to succeed. Cosatu urged Parliament to prioritise and pass this long overdue and progressive Bill.


Ms Kohler-Barnard said the Banking Association had indicated that the licence, as it currently stood, was one issue, but extending the licence fell under the Banks Act. The regulatory oversight by the Prudential Authority, which would build an additional level of trust between the Postbank and its customers/depositors was dealt with by the Banks Act, and fell under the Standing Committee on Finance. This was out of this Committee’s purview.

As for the FSCA inputs, the Treasury was currently developing the Conduct of Financial Institutions Bill, which this Bill should lock into crucially. This must be considered seriously. It might require delaying this process until that one was completed and passed, otherwise further amendments might be required. The licence of the bank would be under the Banks Act, which also fell squarely under the Standing Committee on Finance. It seemed to have left out a reference to the Prudential Authority.

She cautioned against another VBS situation, and how this must be avoided at all costs.

In listing all the complaints, she asked the OBS if there was information or complaints that informed Members on what was related specifically to the Post Office.

Cosatu had referred to supplying banking in rural areas, but it may not be aware that so many post offices had been shut down in the rural areas. The number was sitting at around 170. People now had to use much of their grant money for transport to access it. It was a huge issue. Considering the bankruptcy of the Post Office – the fraudulent claim of members’ contributions for medical aid, and pensions siphoned by management and used to pay other bills and leaving members without medical aid and their pension fund -- she had called the Hawks to investigate this matter.

Ms T Bodlani (DA) welcomed the submissions and said that she acknowledged the need to get more South Africans into the banking system. What she was questioning was not that need, but the vehicle that was being proposed to service those needs, which was the Postbank. She also felt that this Bill was technical, and it would be prudent to have joint engagements with the Standing Committee on Finance, as this was their area of expertise.

The failure of state-owned companies in South Africa was public knowledge, which resulted in their requiring bailouts. This made the markets nervous, hence the high unemployment rate as well.

The separation of the Postbank from SAPO was going to cause a decline in the net asset value of SAPO. The CEO of SAPO also flagged this matter during the annual report engagements in the previous meeting. This unbundling had huge implications for the ailing SAPO. The Bill, as it stood, proposes that SAPO could not be the bank controlling company because it was bankrupt, which would make the Minister the bank controlling company (BCC) for the Postbank. This would give the Minister too much power. Right2Know also concurred with the notion that one did not want so much power vested with the Minister, one individual. It was unfortunate that SAPO was not financially sound. The Postbank would cripple SAPO further.

National Treasury also agreed with the fact that this would further cripple SAPO and that the Minister would have too much power. She asked how the Postbank would compensate for the goodwill of the Post Office. A feasibility study must be conducted on this, and then be implemented.

A new board and executive management would be required, as well as all the other functions and committees, and these would have financial implications for the Postbank. She asked for a feasibility study on this matter so that the Committee could make informed decisions about this Bill. The feasibility study must also look into how this Bill would further cripple the SAPO financially.

As Cosatu had claimed, the Postbank showed no characteristics of self-sustenance, and she agreed with this. The bank would be a substantial burden to the fiscus. The state had also admitted that SAPO had been financially crippled and would not be able to fund this project. This was going to be a burden on the state.

BASA had spoken about how it would want to suggest a split in the composition of the board, and the controlling company to be 50/50. She agreed with this sentiment, to avoid having the Minister with absolute power.

Right2Know was correct that the board should have a strong autonomous role, which was welcomed. The FSCA had lamented the lack of clarity on SAPO and its intentions to render financial services. It had advised that it would be beneficial to include clear definitions of financial services. This meant that there was no clarity on the spending of the Postbank, and a lot of work still needed to be done.

The Committee was tasked with passing constitutionally sound bills in Parliament, so she requested they should not rush the Bill, and do proper due diligence by inviting the Standing Committee on Finance and National Treasury to form part of the engagements, as well as do an impact study on this proposed Bill.

Ms Kubheka said that this was not the first time the Committee had dealt with the Post Bank, but agreed to invite the Standing Committee on Finance and the National Treasury.

Mr V Pambo (EFF) said the separation of Post Bank from SAPO was still not convincing. They did not want a bank that would have the dirty hands of capitalism. He agreed with R2K that they did not want a Minister that was a sole shareholder. This had been the case at Eskom with Minister Pravin Gordhan. This did not enhance accountability, but gave the Minister power. Why should the Postbank be separated from SAPO when SAPO has all the infrastructure in place? Although 170 branches had been closed, that did not necessitate the separation, and the infrastructure could still be utilised. SAPO must be capacitated to yield positive results at the right time. This would create a small micro-lending institution in some peripheral village somewhere, where people would not have proper access to this Postbank.

To start from scratch was not feasible, and SAPO should be capacitated and then apply for a licence, or they would end up with a small entity that would not yield the desired outcome. SAPO must be fixed and then look at expanding.

He also agreed with the sentiment that the Standing Committee on Finance and National Treasury should be invited. The Bill must not be pushed to be passed without conducting a thorough process on it.


Ms Steyn replied that the complaints were from all the banks. The Postbank had about ten complaints, which was significantly less than other banks. These complaints were about automatic teller machines (ATMs) not dispensing cash and a few savings account queries. If the Bill was passed, this picture would change completely.

Mr Mhlongo commented that some of the mandates lay with the Standing Committee on Finance, and it was sensible to include it in this process. If this is not done, it may end up delaying the process. They agreed with the sentiments made by the Members on this.

Mr Parks replied on the Conduct of Financial Institutions Bill, and said that this Bill had left the National Economic Development and Labour Council (NEDLAC) a while ago and Cosatu had engaged with Treasury to expedite bringing it to Parliament. The Postbank did not necessarily need to be delayed because of the former Bill.

Currently, as things stood, one may be correct to assume that this Bill had gone through all the necessary processes before it was brought to Parliament. There was nothing wrong with asking Treasury to also make inputs on this Bill.

Cosatu was aware of the SAPO branches that had closed, and its members who worked at the Post Office had been struggling. They were struggling to get paid, access medical aid benefits, and experience pension fund issues. They could continue doing nothing about this, or revive the Post Office. They could intervene and stabilise the Post Office. Intervention was required before these institutions died. This Bill would help revive the Post Office. Just because it was going to be a state bank, it did not mean it could not be capacitated with competent management and board.

Mr April said BASA supported the Bill because the Postbank already had a provisional licence from the Reserve Bank since 2015. This Bill would enable it to comply with the regulations under the Banks Act and would assist it to obtain a full licence from the Reserve Bank.

Ms Kubheka welcomed the suggestion by Members to include the Standing Committee on Finance and Treasury in these engagements.

The Chairperson eventually gained his connectivity, and said that Cosatu had made a point that as they looked at the challenges at SAPO and the Postbank, it must be considered that the objective was to restructure the Postbank to operate like any other bank. This did not mean the suspension of other interventions that needed to happen now at the Post Office. Therefore, the support for the Bill did not mean a lack of support for the required interventions at SAPO. In the intervening period, something must be done about SAPO.

He then cautioned against stalling this process until the SAPO interventions were done.

There had been responses from the Minister of Finance on the referral of this Bill to the Committee. The Postbank reports to this Committee, not the Standing Committee on Finance, and the referral in the ATC would have been correct if this Committee spearheaded that.

The Bill had been subjected to socioeconomic impact assessments before coming before the Committee, and had also gone through Cabinet. The amendment in the Bill seeks mainly to amend the structure of the Postbank.

The consultation to obtain the views of the Standing Committee on Finance should not alter the fact that it was the responsibility of this Committee to spearhead this Bill.

The engagements were still preliminary at this stage. Responses from the Department were still much awaited. There was general support for the Bill from the different stakeholders, and this emphasised the fact that this Bill must be pushed forward, the quicker the better. Some proposals were about the protection of customers and compliance with other legislative requirements.

The separation issue was dealt with in 2019, and the Postbank would have been operating along those lines. These institutions could work together -- they did not necessarily have to operate under one another, but together. The Postbank would be building from the infrastructure that already existed.

Ms Khumbudzo Ntshavheni, Minister of Communications and Digital Technologies, said the Department would present a report to the Committee in terms of the detail of the issues raised. A full submission would be made.

She clarified the issue of separating the Post Bank and the Post Office, saying this was a requirement by the Prudential Authority and/or the South African Reserve Bank. If the Postbank was to be licensed as a bank, it must be separated from the Post Office to fully comply with the Banking Act. Even in the Bill, it was clarified that the Postbank would ride on the infrastructure of the Post Office. The infrastructure would still be shared. A strategy would be developed on how the Postbank would leverage that infrastructure to ensure that the Post Office infrastructure did not collapse as the Postbank utilises it.

Secondly, the Department appreciated the support from the general members of the public because it was part of ensuring that the Postbank caters to the lower class of consumers who do not have access to banking services from commercial banks. The separation of the two entities was also overseen by this Committee, not by the Standing Committee on Finance.

The Chairperson indicated that the Committee would interact with the Standing Committee on Finance but without delaying what the Committee was expected to do.

The meeting was adjourned.

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