/ 1 August 2008

Banks ‘sabotaging’ Financial Sector Charter

Banks are sabotaging the Financial Sector Charter because they cannot get their own way on lower broad-based black economic empowerment (BBBEE) standards, the Financial Sector Charter Council (FSCC) said on Friday.

The FSCC accused the institutions of walking out of negotiations to gazette the charter earlier this week.

They allegedly refused ”to discuss any aspect of aligning the charter with the BBBEE codes of good practice until the dispute around black ownership targets in the financial sector is resolved”, read a statement.

This latest ”sabotage” of the gazetting process followed the refusal two weeks ago by the Banking Association of South Africa (Basa), the Life Offices’ Association (LOA), the South African Insurance Association and other financial-sector trade associations to discuss staffing and funding of the charter council until the ownership dispute was resolved.

”It echoes threats by the Banking Association over the past few months that the big four banks were considering pulling out of the charter unless they get their way on lower black ownership targets,” the statement said.

Late on Thursday, Basa MD Cas Coovadia said the FSCC had already agreed to ”substantially align” all elements of the charter to the Trade and Industry Department’s codes of good practice. The only exception to this was the ownership element.

He added that the meeting held earlier this week was to consider a draft sector code, with the exception of ownership.

”We have made substantial progress with this draft,” he said.

However, Coovadia said that trade associations took the view at the meeting ”that we have gone as far as we can on discussions on a sector code, and we need to resolve the ownership issue before completing discussions on this”.

Also last Thursday, the LOA said that it would never consider boycotting the Financial Charter process or walk out of negotiations. ”The negotiation remains an ongoing process.”

The National Treasury also rejected claims that the banks and other trade associations boycotted negotiations.

”These claims are untrue and a misrepresentation of facts,” it said. ”The trade associations simply requested time to consult with their constituencies on the revised draft sector code.

”The trade associations also expressed concern at the slow progress in the resolution of the ownership matter but certainly did not walk out of the meeting.” — Sapa