Nedbank is one of the few financial institutions that meets the ownership targets of the Department of Trade and Industry’s BEE codes.
Sakkie O’Neil, head of transformation at Nedbank, says that under the codes the bank has 17,5% direct black ownership.
But Nedbank still has concerns about aligning the Financial Sector Charter with the department’s codes, as they make no provision for a high-water mark. In other words, if more than 40% of black shareholders sold their shares, Nedbank would have to go back into the market to do a further BEE deal. The charter recognises a “once empowered, always empowered” policy.
But O’Neil says Nedbank took a different approach to BEE: unlike other banks where beneÂfits accrue to the BEE partner in year 10, effectively locking the partner in for that period, the bank took a free-market approach and paid dividends from year one, with only a three-year lock-in period.
Nedbank’s retail scheme matures in October and the bank could see a dramatic fall in black ownership if investors choose to sell.
If the bank has to return continually to the market to maintain its ownership levels, it will take its focus away from funding other BEE transactions in the economy, warns O’Neil.
He says the Trade and industry department has mooted a central warehouse where the department has the right of first refusal on any share sold for the bank to retain its BEE status. A decision had not yet been made.
But community groups and the labour movement are concerned about the Financial Sector Charter’s once empowered, always empowered policy.
They argue that one cannot have a situation in which black shareholders sell their shares to whites and still call it black empowerment. They argue that if deals were more broad-based there would not be a rush for black shareholders to get their money and run. They believe deals have been done with people who are not interested in owning the financial industry, but in instant wealth.
O’Neil says there are also issues with how ownership is calculated, as it is left open to interpretation. He says the main problem is that no veriÂfication agencies have as yet been approved.
He says the trade and industry department issued a verification manual for agencies in July and financial institutions have to reassess their scorecard on this basis.
“Until there are agencies available, confusion will continue across all charters and all sectors of economy,” says O’Neil.
A final hurdle in measuring ownership correctly is the calculation of indirect ownership in black hands through pension investments. O’Neil says Nedbank has calculated this to be in the region of 33%, but the codes require this to be confirmed by a competent person. Who qualifies is not defined.