The South African Reserve Bank is considering an application by the state-owned Postbank to allow it to lend, fulfilling a government pledge to use its 1,500 outlets to give poor and rural communities access to credit.
“Postbank’s goal is to provide simple, affordable banking services to the underbanked and unbanked,” acting Managing Director Shaheen Adam said in an e-mailed response to questions yesterday. “Postbank is optimistic that the license will be granted in due course without in any way detracting from the independence of the SARB in exercising its mandate.”
President Jacob Zuma has pledged to support small businesses with better access to credit as he tries to spur activity in an economy that contracted in the first quarter and has a 25.5 percent jobless rate.
Established banks such as Standard Bank Group Ltd. and Barclays Africa Group Ltd. do too little to lend to new entrants into the market, senior ruling party officials including Tito Mboweni, the former central bank governor, have said.
It has taken about a decade to ready Postbank, a unit of the national Post Office, to apply for the license. It will allow it to provide financial services beyond the transactional, savings and investment accounts it currently offers. The bank has used the time to build up reserves from which it can lend to about 1.7 billion rand ($161 million), which will allow it start its lending operations, Adam said.
Standard Bank, which is based in Johannesburg and is Africa’s biggest bank, had 886.6 billion rand in loans and advances outstanding to clients as of June 30, according to the lender.
The Postbank is in talks with other government bodies about supporting a plan to lend to small businesses in areas with less access to financing, Adam said. Mboweni on July 29 said the government should consider buying one of the existing banks to allow it to achieve this as Postbank lacks the infrastructure or the “muscle” to compete.
While the current application will allow the Postbank to establish a full bank, it will need other approvals before it can start operating, Adam said. The Pretoria-based central bank confirmed it is considering an application, which it received in the fourth quarter of 2013, according to an e-mailed response to questions.
The Treasury said in an e-mailed response to questions it is chairing a group including representatives from the Department of Telecommunications and Postal Services, the Post Office and Postbank to oversee the institution’s “corporatization.”
If granted the license, Postbank will have to compete with African Bank Investments Ltd., which was rescued by the central bank on Aug. 10 after a record loss in its unsecured lending business triggered a 95 percent drop in its share price over three days. Other lenders include First National Bank, a unit of Firstrand Ltd., Nedbank Group Ltd. and Capitec Bank Holdings Ltd.
The government also owns the Industrial Development Corp. and the Development Bank of Southern Africa.