‘Banks must transform more’: Calls grow for banks to boost black ownership

Standard Bank Group CEO Sim Tshabalala and his deputy Kenny Fihla may be black and several historically disadvantaged South Africans occupy key positions in the institution, but that does not go far enough for the parliamentary portfolio committee on finance.

Chair Dr Joseph Maswanganyi is behind a push for the country’s major banks – Standard Bank, FNB, Absa, Investec, Nedbank and Capitec – to transform.

According to Maswanganyi, the call for transformation, includes:

• Ensuring that blacks own up to a 50% equity stake;
• Equitable financial participation in banking and inclusive economic growth; and
• An end to the prejudice suffered by most black-owned and previously marginalised South Africans who fall short of banking benchmarks, to receive financial services and assistance.

Call for transformation in banks

“We acknowledge developments made in the financial sector since 1994, when it comes to employing back people to managerial positions, which we applaud.

“We are raising the issue of transformation as it pertains to ownership, which is still dominated by white people.

“They cannot show us the 20% of blacks owning Standard Bank, except the level 1 B-BBEE rating [broad-based black economic empowerment],” said Maswanganyi.

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In its response to Maswanganyi’s assertions, Standard Bank said it had taken strides to transform the company and to ensure that it catered for all South Africans. Fihla said: “With its 163- year heritage, Standard Bank remains dedicated to South Africa’s growth.

“The bank’s economic impact extends beyond direct services, with roughly 92% of its lending directed towards productive economic activity.

“This includes supporting infrastructure development and providing green finance, growing small businesses, creating jobs and promoting access to housing and education.”

Role in driving inclusive economic growth

Drawing on its audited 2023 financial year’s economic contributions, the bank highlighted its “significant role in driving inclusive economic growth”.

Fihla said Standard Bank was SA’s largest lender to the government.

The bank had advanced more than R20 billion to state-owned entities and municipalities.

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This was “to address the infrastructure backlog across the energy sector. It included water and logistics sectors over the past five years.

“Standard Bank also facilitated over nine gigawatts of renewable energy capacity and committed more than R60 billion to the renewable energy independent power programme,” Fihla added.

Standard Bank continued to support small businesses, serving over 460 000 active small enterprise clients who received more than R12 billion in loans during 2023.

Standard Bank supports small businesses

“The bank extended R36 billion in retail and corporate asset finance loans in 2023.

“It mobilised R15.5 billion for renewable energy power plants in the same year.

“As a market leader, one in three homes in South Africa is financed by Standard Bank.

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“We work with the National Housing Finance Corporation and provincial governments to help first-time home buyers with access to funding,” Fihla added.

Additional economic contributions in 2023 included:

• Tax contributions totalling R12 billion;
• Suppliers and service providers were paid R24.6 billion;
• Salaries and incentives for employees accounted for R31.8 billion.
• Corporate social investment totalled R142.2 million;
• Arts sponsorship spend amounted to R26.4 million; and
• Payments to smallholder farmers totalled R61.4 million, including R22 million paid to women farmers.

The Banking Association South Africa (Basa), representing 30 local and international banks licensed to operate in the country, said the 2024 transformation in banking report found that banks were “ahead of the Amended Financial Sector Code targets on black voting rights and economic interest in banks”.

Ahead of 25% target – Basa

“Overall black voting rights are at 38% for 2023, against a target of 25%.

“Black economic interest – the right to share company profits – is at 29%, against a target of 25%.

“Banks are on track to meet or further exceed black management control targets.

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“Ninety percent of junior managers in banks are black – above the target of 80%.

“While senior and top senior managers are noticeably below target, the strong pipeline of junior and mid-level black managers, is a sure indication that senior managers will soon reflect the demographics of the country.

“Already, 48% of bank directors are black, against a target of 50%.

48% of directors are black

“Nine of South Africa’s biggest banks have already reached level 1 B-BBEE status.

“This means that fully empowered banks have over 83% of the South African market share by assets,” said Basa spokesperson Paul Stober.