1. National Treasury
Presentation to the Portfolio Committee on Communications on the Postbank Bill
National Treasury

2. Contents Treasury Objectives Treasury Strategy Global Financial Crisis
Forms of Regulation
Need for Regulation
Corporatisation
Postal Infrastructure
Inter-departmental Committee on corporatisation
Guidelines to the Bill
End

3. Treasury Objectives
Enhancing competition and stability in the financial sector
Promoting financial access, especially, to the poor
Enhancing transformation in the financial sector

4. Treasury Strategy
Fostering community based financial institutions in terms of the Co-operatives Banks Development Act,
Financial Sector Charter process and the resultant Mzansi account,
Banking Inquiry initiative
Legislation for the development of the 2nd tier of banks (Dedicated Banks Bill)

5. The Global Financial Crisis
The financial crisis has reinforced the need for adequate supervision and regulation of financial institutions
Weak institutions can destabilise the financial system & their economies
Therefore, all financial institutions MUST be regulated
Postbank Not regulated

6. Forms of Regulation Prudential regulation
Capital, assets, management, earnings, liquidity and solvency per institution and at the macro-level
Market conduct
Pricing and other consumer protection issues

7. Need for Regulation
Regulation and licensing ensure that, amongst other things, the regulator is satisfied that:
the business the applicant proposes to conduct is that of a bank
the business of the bank will be conducted in a prudent manner
the establishment of the bank will be in the public interest
the applicant will be able to establish itself successfully as a bank
the applicant will have the financial means to comply with the banking legislation

8. Corporatisation
The White Paper on Postal Policy (1998) envisaged the Postbank as a viable vehicle for providing banking services to low-income groups & the rural poor in SA
Commercial banks had a low penetration rate in the provision of banking services to low-income groups & the rural poor
As of Dec 2009, 59% of the adult population had a basic bank account

9. Postal Infrastructure
Meanwhile, the Post Office has an infrastructure which reaches deep into rural areas
It is felt that the Postbank should take advantage of the Post Office’s wide outreach
The need for restructuring also got momentum when postal operations of the Post Office were loss-making around 2000/01
To fund these losses, the Post Office utilised depositor funds in the custody of the Postbank
As a result, the Post Office was recapitalised to the tune of R750m in 2003/4
It thus became important to “ring-fence” depositor funds from the rest of SAPO operations

10. Interdepartmental Committee
In 2005, the Ministers of Finance & Communications agreed on the vision for the restructuring of the Postbank
They further agreed that their respective departments shall work jointly to manage the corporatisation process
This led to the formation of an interdepartmental committee which comprises staff from the Treasury, DOC, SAPO and the SARB
This Bill is an outcome of the deliberations of the interdepartmental committee
The interdepartmental committee is also facilitating the designation of the Postbank as a payment system participant

11. Guidelines to the Bill
The purpose of this Bill is to give effect to an internal restructuring of SAPO, i.e. converting a division into a corporate entity
Corporatised entity to assume current business of the Postbank division of SAPO, namely:
Deposit taking
Money transfer
Third party payment
Provision is made for the corporatised entity to apply for a licence to operate as a bank (See section 4 of the Bill)
Meanwhile, the Treasury is also working on legislation for 2nd tier banks, which may be more suitable for the Postbank & Ithala

12. Guidelines (cont…) The corporatised entity shall be owned by SAPO
New business of the corporatised entity shall be determined in terms of its banking licence
Possibly to include lending
Provision is also made for the corporatised/ licensed Postbank to be supervised & regulated by the Registrar of Banks

13. END
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