Chairperson and hon members, this Bill seeks to amplify and improve certain provisions of the Banks Act, Act 94 of 1990, through the medium of amendments which, during the course of the administration of the principal Act by the Office for Banks, in consultation with foreign supervisory authorities and international standard-setting bodies, such as the Basle Committee on Banking Supervision, were found to be advisable.
The Bill improves the principal Act in order to make it accord more with international banking standards and best practices as set out in the Core Principles for Effective Banking Supervision. These so-called Basle core principles are intended to serve as a basic reference for supervisory and other authorities in all countries and internationally. Accordingly, the amendments contained in the Bill are proposed in order to ensure that the South African legal framework, in terms of which banking institutions and banking groups are regulated and supervised, remains relevant and current, and in line with the latest national and international developments and standards.
After a lengthy process of consideration, the Standing Committee for the Revision of the Banks Act, appointed by the Minister of Finance, has approved the envisaged amendments described in the Bill. The committee consists, amongst others, of representatives of the banks, the Banking Council of SA, credit unions, stokvels and the Post Bank.
The proposed amendments may be summarised as follows: first, to insert in the principal Act certain new definitions and expressions, such as ``banking group branch'', ``branch of a bank'' and ``tertiary capital'', and to amend some of the existing definitions; second, to provide for the designation, by the Reserve Bank, of more than one Deputy Registrar of Banks, but not exceeding four, from amongst its officers; third, to provide for the confidential treatment of due diligence reports, drawn up in consequence of the conducting of the due diligence audit of the financial condition of a bank; fourth, to substitute a process of review for the existing process of appeal against decisions of the Registrar of Banks. Fifth, to empower the Registrar of Banks to authorise a banking institution to use or refer to it by a name other than the one under which it is registered; sixth, to further consolidate principles of good corporate governance with regard to the membership of the audit committee of the bank; seventh, to abolish judicial management of a bank that is in financial difficulties and, instead thereof, to render the process of curatorship of such a bank more comprehensive; eighth, to increase the minimum capital and unimpaired reserve funds required to be maintained by a bank from R50 million to R250 million, and to provide for additional capital and reserve funds to be maintained by banks in respect of their trading and financial instruments; ninth, to provide for the maintenance of an aggregate of minimum capital and reserve funds in respect of a banking group; tenth, to allow banks greater flexibility in the utilisation of their liquid assets; eleventh, to introduce further safeguards in respect of large exposures constituting credit risks to banking institutions; and, finally, to create and prescribe penalties for certain further offences.
The select committee passed the Bill as presented, save for one minor amendment in clause 4, which now provides that persons called as witnesses by the board of review considering a review of the decision of the Registrar of Banks are entitled to legal representation at their own expense.
The Ministry notes the concern of the select committee that the principal Act is gender biased in certain sections. A state law adviser in attendance advised that having a different gender description in part of the Act would cause uncertainty and inconsistency as to the meaning of such sections. It needs to be far more thoroughgoing across the whole of the principal Act. We therefore commit ourselves to correcting the gender issues in the next round of amendments in the principal Act. [Applause.]