1. Postbank Corporatisation – The journey to date November 2017

2. Overview of Postbank
Postbank’s vision is to offer simple, affordable and convenient banking solutions for our communities, and in so doing, “become the bank of choice” for the lower end of the market
Postbank obtained an interim section 13 banking licence on the 4th of July 2016 and applied for the section 16 final banking license on the 26th of June 2017
Postbank has 219 employees with 70 vacancies. Most staff are based at the Bloemfontein operations office. New structures to support banking licence requirements have been developed and implemented – IT, Risk, Compliance, Finance, Project Management etc.
Postbank has 5.8 million accounts, of which around 4 million are active
Only offer transactional and savings accounts. Will offer lending products after banking license is received.
Key financials at 31 October2017:
Deposits R 5.5 billion ($393 million)*
Investments and Assets R 8.5 billion ($607 million)
Net Equity R 3.0 billion ($214 million)
YTD Operating profit (7 months) R 191 million ($14 million)
* - Using Exchange Rate of $1 = R14

3. Government’s banking partner for financial inclusion
Vision and Mission
Vision
Government’s banking partner for financial inclusion
Mission
Be the banking partner to government, enabling us to offer simple, affordable and convenient banking solutions for our communities
Postbank is focused on ensuring Low Cost, Simple, Accessible and Affordable banking solutions for the underserved and underbanked communities

4. What does Corporatisation mean?
Current:
Division within SAPO
Exempt from Banks Act
Limited product range
Limited accessibility – only branches and call centre
Non-compliant IT platform
Organisation structure aligned with deposit taking activities
Sub-optimal processes
Future:
Stand-alone entity 100% owned by SAPO
Under the Banks Act supervision
Increased product range
Introduce more channels
Compliant IT platform
Organisation structure aligned with Banks Act
World class processes

5. The corporatisation plan
PHASE 1
PHASE 2
PHASE 3
PHASE 4
POSTBANK READINESS MEANS:
Provision of simple, accessible and affordable products and services for our communities
Efficient and reliable IT systems
Compliance with the regulatory and legislative framework (Banks Act and regulations etc)
Recruitment of appropriate individuals
Up-skilled and competent staff
World-class scalable processes
Enhanced MIS and regulatory reporting, resulting in:
The award of a banking license

6. Time period required for award of banking license
The Banking Licence application process is governed by the South African Banks Act and supporting Regulations
There are key steps to be followed in obtaining the licence:
Section 12 application to establish a bank.
Postbank received permission from the SARB to Establish the Bank
2. Section 16 application to register a bank.
Postbank submitted its section 16 Application to Register as a Bank on the 26th of June 2017
In terms of Section 16, there are 12 months available to demonstrate compliance in order to be awarded the banking licence (section 17). This 12 month period commenced on the 4th of July 2016 – date that Postbank was given approval by the SARB to establish the Bank. (The Postbank company was incorporated in this 12 month period and the license application was submitted).

7. Progress made to date Procurement partner appointed to
2010/11
2012/13
2014/15
2016
Procurement partner appointed to
assist with the sourcing of a transaction advisor
Postbank Act promulgated
Draft Memorandum of Incorporation developed
Obtained membership in the VISA card association
Developed policies (lending,
borrowing & investments)
Transaction advisor on board from the 16th of January 2012
Phases 1, 2 and 3 completed
Proposed process for the transfer of staff completed and approved by SAPO Board
Obtained full membership in the Payments Association of South Africa (PASA)
Amended Postbank Act promulgated
Received funding from National Treasury
Submitted section 12 Application to Establish a Bank
Partial IT Disaster Recovery implemented
New core banking system successfully implemented
Appointed Chief Customer Officer and HR Executive
Business to be transferred to Newco determined by the Minister
Obtained Mastercard membership
IT readiness initiated, i.e. Started EMV and Postillion (switch) Upgrades
Implementation partner appointed
Obtained s13 Authorisation to Establish a Bank (with conditions)
Agreement reached with Group on transfer of IT resources i.e. people, software and hardware
Head: Internal Audit and CIO appointed
SARB designated 5 Postbank Board nominees as “fit and proper” and cleared all Postbank Executives
Appointed 25 internal resources for implementation and compliance purposes

8. Progress made in 2017
Postbank Board appointed by the Minister of Telecommunications and Postal Services in March 2017
Postbank SOC Ltd company registered in April 2017
Implemented a number of banking critical IT systems:
IT disaster recovery capability
Anti Money Laundering system
Fraud prevention and detection application
Regulatory reporting system
Section 16 application to register as a bank submitted to the SA Reserve Bank (SARB) on the 26th of June 2017 – Prior to the deadline of 3 July 2017
Received first batch of queries from the SARB and responded to them in November 2017

9. The way forward and what has to be doneNO
KEY ACTIVITY
TIMELINE 1.
Banks Act to be amended to allow for a State Owned Company to be registered as a Bank
Q4 2017 2.
Postbank Bank Controlling Company (BCC) to submit section 43 application to be registered as a BCC 3.
Obtain Banking License from the SARB
TBC by SARB 4.
Postbank Board to fill critical Executive positions – MD, Chief Financial Officer, Chief Risk Officer and Company Secretary
Q1 2018 5.
SAPO and Postbank to implement interventions to retain critical skills within Postbank and engage organised labour 6.
Minister to approve assets and liabilities to be transferred to the Postbank company
Occurs after award of the banking license 7.
Postbank SOC Ltd and SAPO SOC Ltd to enter into a Transfer Agreement and to sign a Cooperation Agreement 8.
Transfer staff, operations and balance sheet to the Postbank Ltd

10. What are the key learnings?
State Owned entities need to deal with legislative issues in addition to the standard requirements needed to operate as a Bank
Need strong political support for the journey e.g. appoint Board, legislative amendments etc.
Procurement processes can take longer than the actual implementation
Operating a bank requires a different set of skills when compared to applying for a Banking License – Need external expertise and short term capacity support
There are challenges in attracting talent in a State Owned Entity e.g, can’t offer shares, brand issues etc. – People are generally attracted by the learning opportunities, diversity of work and by the opportunity to grow.