Hon Chairperson, before I get to the report, I would like to mention that the hon Von Brandis was an hon member of the Select Committee on Finance and the Select Committee on Appropriations. He added value to the work of both these committees. Our condolences go to his wife and his family. May his soul rest in peace.
A sound banking system and financial stability are key to ensuring long- term economic growth. Failed banks have the potential to cause substantial disruption to the financial system and impact on the lives of ordinary South Africans. In order to promote the soundness of the banking system, it is imperative that the regulation and supervision of banks is based on international standards and best practice.
The Banks Act, Act 94 of 1990, contains the framework for the regulation and supervision of banks and bank-controlling companies in South Africa. Although the Banks Act contains extensive provisions relating to the resolution of a failed bank and concomitant powers afforded to the curator appointed to effect such resolution, it has become necessary to revise some of the provisions of section 69 of the Banks Act that are unnecessarily stifling such resolution efforts.
The objectives of the Bill are, firstly, to provide an alternative to recovery of a bank within the existing corporate entity; secondly, to facilitate the transfer of all or part of a bank's business to a successor entity, pursuant to a transfer under section 54 of the Banks Act; and thirdly, to facilitate the implementation of the above steps by the curator.
The amendments in the Bill refer to the powers of the curator to dispose of assets and to manage the bank and make decisions on behalf of corporate shareholders in order to avoid additional fetters on his or her ability to perform his or her duties. The amendments in this Bill also empower the Minister to enable the curator to raise funds from the SA Reserve Bank, or any of its entities, to provide security over the assets in respect of such funding.
The Minister may also enable the curator to propose and enter into an agreement or compromise between the bank under curatorship and all its creditors, in terms of section 155 of the Companies Act. The Bill also expresses the provision that any administration action taken in terms of the Banks Act, including by a curator, is subject to the Promotion of Administrative Justice Act, Act 3 of 2000.
The Select Committee on Finance unanimously approved the amendments. I move that the House consider this report. Thank you. [Applause.]
Debate concluded.
Declarations of vote:
Hon Chair, the EFF objects to the Banks Amendment Bill.
What's new, Mtileni?
We are asked to amend legislation to save the very same banks that continue to play a role in facilitating some financial crimes, including illicit financial flows. Must Parliament now change the legislation so that we can continue to protect white capital monopoly, while the poor and working South Africans are exposed to high, unsecured lending practices of loans they cannot afford?
The EFF has made an unequivocal call on what South Africa must do with banks, including the Reserve Bank. State intervention to failing banks must not be the appointment of curators, but outright nationalisation. Banks and other strategic sectors of the economy can only be transformed through a radical change of ownership and control, and we will continue to call for this.
The state must take up greater responsibility, intervention, ownership and control of the Reserve Bank, given its strategic role in our economy. It is then that we can start engaging in a constructive and meaningful debate on the value of exchange controls to ensure that multinationals doing business in South Africa will start complying with the country's legislation to stop the looting through illicit financial flows. The Banks Amendment Bill is not in the public's interest and therefore the EFF rejects it. Thank you.
Hon Chairperson, sometimes it is just very confusing, listening to the logic of the EFF. Nevertheless, on behalf of the DA, I hereby state that the demise of African Bank represents the biggest destruction of value in the financial services sector since the collapse of Saambou. Analysts indicated that the demise of African Bank was entirely predictable and that the Reserve Bank intervention was, of course, far too late. This brings the effectiveness of the oversight function of the Reserve Bank into question.
Section 69 of the principal Act is hereby amended to expand the actions a bank curator can take, to include the transfer of any of the bank's liabilities and disposal of any of its assets. As it will retrospectively permit the curator of the bank to now transfer and dispose of assets and liabilities to their detriment, they argue that because the bank is not liquidated, they should enjoy a higher preference than they have received under the rescue package.
There is an impasse as to whether the Bill infringes on constitutionally protected property rights found in section 25 of the Constitution. Two legal opinions indicated that section 25(1) is applicable - and this now allows the deprivation of property if it is in terms of a law of general application. It might be difficult for the EFF to digest that right now. This law, then, does not provide for arbitrary deprivation.
So, noting the different legal opinions presented to the committee, the DA is aware that we need urgent legislation to give effect to the restructuring of the new bank. We noted the curator's view that the company or bank is insolvent and that section 69(3)(b) is the existing power in the Act, currently. The amendments are merely bringing curatorship up to date.
In conclusion, the curator stated that the only answer is from the consortium of banks to restructure a financial solution, noting that liquidation should be avoided at all costs, as the reputation of the banking sector and the economy of South Africa should now be protected. I thank you.
Hon Chairperson, amendments to the Bill were unanimously agreed upon in the Select Committee on Finance meeting, and the ANC supports this Bill.
There is still an urgent need to address the gaps within the financial sector legislation and mitigate existing risks in the financial system. This Bill therefore addresses several urgent short-term and long-term issues. Why? To facilitate the best option with respect to the curatorship of African Bank because there are shareholders; to remedy some gaps identified by the financial sector assessment programme and adhere to international standards for financial sector regulation; and to align the provisions of the Banks Act with the appropriate sections of the Companies Act.
So, I think the hon Mtileni in the EFF must go and do some more reading. We can also ask Prof Jahed from the Budget Office to assist in explaining the banking system in South Africa and how the whole network fits together. We can all learn from that.
The ANC supports the Bill. Thank you.
Question put: That the Bill be agreed to.
Bill agreed to in accordance with section 75 of the Constitution.