Banking
• Standard Bank was founded in Port Elizabeth nearly 150 years ago
The South African banking and financialservices sector provides a full range of services, including commercial, retail and merchant banking, mortgage lending, insurance and investment. The Eastern Cape is well served by financial institutions with all the major banks and insurers having a presence in the province, many of them with roots that date back many decades. Indeed, Standard Bank was founded in Port Elizabeth nearly 150 years ago.
In the eastern parts of the Eastern Cape, Meeg Bank, in which Absa has a majority shareholding, is active, while Uvimba Bank concentrates on agricultural loans.
Institutions
The South African Reserve Bank (SARB) is the national central bank and falls under the national Department of Finance. It sets monetary policy and decides on domestic interest rates. The SARB oversees the banking-services sector, while the Financial Services Board governs the non-banking financial-services industry. South Africa’s principal financial service markets include the JSE Ltd (the national stock exchange), the Alternative Exchange (AltX), the SA Futures Exchange and the Bond Exchange of South Africa (Besa).
Banking sector
Merchant banking and investment banking are the most competitive sectors within banking, and several international banks have a presence in South Africa. Retail banking, on the other hand, is very much the preserve of the ‘Big Four’ – Standard Bank, Nedbank, Absa/Barclays and First National Bank.
Competition is stiff in developing new strategies to incorporate the emerging second economy and the largely rural ‘unbanked’ communities. These new banking means and methods are developing the sector and giving it new flexibility, diversity and range.
Insurance
In its 2008 Financial Stability Review, the SARB found that South Africa’s long-term insurers remained sound, despite the negative effects of the global economic downturn. Nearly 70% of institutions providing long-term cover had assets-to-capital ratios well above minimum requirements. Life assurance is a small market (3.8 million people in South Africa have life cover) with a massive potential for growth – there are 32 million adults in South Africa. According to FinScope, a nationally representative study of consumers’ perceptions on financial services and issues, the number of people belonging to burial societies decreased in 2008 to 25%, from 29% the previous year.
FinScope’s 2008 survey of the financial industry stated that there is ‘an overall lack of insurance products’ and that South Africans are ‘generally underinsured’. In the short-term market, the percentage of South Africans with some form of short-term insurance is static at 10%.
ONLINE RESOURCES
Banking Association South Africa: www.banking.org.za
Financial Services Board: www.fsb.co.za
JSE Limited: www.jse.co.za
Meeg Bank: www.meegbank.co.za
Ombudsman for Banking Services: www.obssa.co.za
