Post Bank shuns deal
THE Post Bank has turned down suggestions that the parastatal should rather partner with commercial banks than pursue a licence that will turn it into a fully fledged commercial bank.
Standard Bank group deputy chief executive Sim Tshabalala proposed that public-private partnerships should be formed in which commercial banks would use Post Bank's 1,600 branches to distribute their products and services.
Tshabalala's view, which he aired at the Banking Association SA Indaba on financial inclusion last week, was backed by the banking association chief executive Cas Coovadia.
But the chief financial officer of Post Bank, Nichola Dewar, shot down the idea.
"If we use Post Bank infrastructure to distribute the services and products of commercial banks it would result in the entity going out of business because it would be expensive to do this," Dewar said.
She said the proposed partnership was a defensive strategy being adopted by the commercial banks, threatened by the looming entry of Post Bank into the commercial space.
Tshabalala, also the banking association's chairman, said the commercial banks' lack of infrastructure in rural areas - where 54% are unbanked - was a major challenge to financial inclusion, and commercial banks would need to raise fees if they were to roll-out the infrastructure.
"As Post Bank already has branches and staff across the country it would make financial inclusion of the unbanked cheaper," Tshabalala said.
He said evidence gathered by the World Bank - in its comprehensive 2007 study of 80 countries titled "Finance, Inequality and the Poor" - shows that state-dominated banking systems produce lower levels of financial inclusion than banking sectors that contain well-regulated, vigorously competing private sector banks.
Coovadia said he was baffled by Dewar's reaction.
"I am bit surprised by Dewar's response. I thought she would say 'we will think about Tshabalala's proposal while Post Bank does other things'," he said.
He said the state was not supposed to compete with the commercial banking sector and Post Bank should not be assessed on profitability.
"The State should focus on making the financial sector leverage on the Post Bank infrastructure, built with taxpayers money, to get people banked," he said.