New registrar of banks faces a changed world
Kuben Naidoo will have a lot to turn his attention to in his new post as the registrar of banks at the South African Reserve Bank.
As of June 1, he will take over from Rene van Wyk, it was announced at this week’s release of the bank supervision department’s annual report for 2015. But the post will be transitional because the Financial Sector Regulation Bill, which the bank hopes will be promulgated by year-end, does away with the registrar.
Naidoo will retain his position as deputy governor of the Reserve Bank. Van Wyk has presided over difficult times for the central bank. His tenure coincided with the effects of the global financial crisis and the fall of African Bank.
Asked whether the Reserve Bank would be better able to prevent another African Bank scenario, in which the bank had to be placed under curatorship, Naidoo said there is a fine line between the supervision of a bank and taking over the management of a bank.
“We might give a bank an explicit instruction, but taking over its management would increase systemic risk. When we think it can’t meet its future obligations, we can put it in curatorship,” he said.
“We cannot guarantee banks won’t fail if they are reckless, imprudent, badly managed. Our job is to make sure there is no systemic risk … and depositors are protected.” The bad debt African Bank racked up remains in the so-called bad bank, now known as Residual Debt Services.
South African banks’ expansion into the rest of Africa will be keenly watched by the bank supervision department, Van Wyk said. “It’s like any family. When your children are far away, you don’t know what they are doing and you depend on structures to inform you.”
He added that these structures still need to be developed between South Africa and the rest of the continent. The risks are not always known as not every jurisdiction has an anti-money-laundering arm, Van Wyk said.
“We have put pressure on bank boards regarding their businesses in Africa. “It is starting to bear fruit. It’s not to say we see risks not being catered for. We know our own back yard, but we don’t know that back yard yet.”
The disposal of Barclays Africa by the Barclays Group, forced because of the higher capital requirements introduced by global banking regulation, did not bother Van Wyk.
“Banks can manage their business much better,” he said. I think it’s [the requirements] a good thing. I foresee that happening elsewhere in the world as well.”
The Reserve Bank said it did not know whether it could avoid a downgrade but would continue to work in an attempt do so.