While Standard Bank earlier this year announced the closure of 91 branches and the loss of 1,200 jobs and Nedbank is “in talks” with 1,500 employees over potential job cuts, the banking sector continues to show high profits.
In March 2019 an Ernest&Young survey on the banking sector showed that, regardless of South Africa’s downward spiralling economy, the country’s big six banks had recorded high profits in 2018 with a return on equity (ROE) “at their highest levels since the global financial crisis”.
How does this sector, with these reported profits (and which has, let us not forget, been implicated – along with the legal, accounting and consulting industries – in aiding and abetting State Capture in South Africa) morally justify this devastating decision?
When are profits enough and when does the well-being of bank employees, their clients and the country as a whole, begin to override this atavistic and never-ending quest for more?
When do banks realise that at the end of all their decisions are human beings, employees and clients (for those lucky enough to earn) who live in a country on an economic knife-edge with the IMF circling overhead.
The South African Society of Bank Officials announced last week that members were planning to down tools over mass retrenchments in the banking sector. The society represents around 73,000 members across the country and General Secretary, Joel Kokela, has said that the strike would take place over two days in September.
It is easy to avoid talking about the massive human cost of these retrenchments by employing a clinical dissection or analysis of the financial sector’s need to ensure greater competitiveness and profitability.
But we are clients of these banks. It is our money that we deposit each month and it is to these institutions that many of us have become cripplingly indebted.
We have a say. Or we should.
Regardless of how many staff are put out on to the mean streets to join the increasing numbers of unemployed South Africans, we, as clients, will still pay the same charges while we are forced to migrate online.
Now, instead of these charges being spread or redistributed into salaries for skilled bank employees, they will end up as profit for hungry and impatient shareholders (no doubt contributing to lucrative executive salaries).
You can argue as hard as you like that the markets are indifferent, that we must bite the bullet, that we must accept the inevitability of technology, that we must accept the correctness of these financial decisions and that businesses are in the business of making profits, but you would be wrong.
That is exactly the moral perversion of the global financial sector since it was de-regulated and massively bailed out in 2008 using taxpayers’ money.
Too big to fail, it was socialism for the rich – the bankers – and sado-capitialism for the rest of us who have had to carry the enormous burden and cost of reduced or cut essential services – medical, education, food costs – in those countries where taxpayers footed the bill for bankers’ excesses and recklessness.
So, the proposed biggest strike since 1920 by banking sector employees in South Africa, deserves our support.
A reminder: in May 2019 the Zondo Commission of Inquiry into State Capture heard evidence of how Nedbank made R780-million after an interest rate switch in a deal involving Transnet, which was being milked by Gupta-linked entities.
Testifying at the commission, Transnet’s acting chief executive, Mohammed Mahomedy, set out how Transnet began negotiations for a syndicated loan of R12-billion to finance the controversial purchase of 1064 locomotives (which now have to be sold because they are useless).
The loan was split between the Bank of China, R3-billion; Absa, R3-billion; Nedbank, R3-billion; Futuregrowth, R1.5-billion; and Old Mutual Specialised Finance, R1.5-billion. The syndicated loan was facilitated and arranged by the Gupta-linked Regiments Capital.
In December 2015, when the loan was signed, the parties agreed to use “market-related floating interest rates”. However, three days later, Regiments executed an interest rate swop between Transnet and Nedbank as a counter-party on R4.5-billion of the R12-billion.
In the long run, Nedbank scored R780-million from Transnet in the interest rate swop.
In June 2019, the Zondo Commission heard that Standard Bank, which operated the Gupta-linked Homix account, used to siphon off multi-millions in kickbacks from state-owned entities, had missed major red flags in the account activity of Homix. The bank also banked, according to my colleague Jessica Bezuidenhout, “a cluster of related Gupta entities that either paid, or received payments from, the company”.
Standard Bank was among the country’s major financial institutions that dumped the Guptas and related companies amid the growing State Capture scandal in 2016.
Before that, it seemed it was business as usual.
Testifying at the Zondo Commission, Shiwa Mazibuko of the South African Reserve Bank’s financial surveillance unit, set out a list of suspect transfers involving Homix and various other companies. These, said Mazibuko, were typically layered to disguise the origin or ultimate beneficiaries of cash emanating from state-owned enterprises.
He testified that Homix had held two accounts with Standard Bank that had been largely inactive or dormant up until around March 2014. Then there had been a “sudden and dramatic” increase in activity, characterised by several large deposits.
“This is a huge red flag. Banks are at the coalface and when you look at money laundering, there are three stages. If you have stolen money and you can place it into a bank account, then the process has started.”
In this case, Mazibuko said, if such cash is just accepted at a bank without being questioned, it begins the process of integrating illegal money into the formal system. He added that Homix received roughly R660-million in credits between March 2014 and June 2015, the period reviewed by the Reserve Bank.
And, as soon as the funds were deposited into the account, it was transferred onwards to various other accounts, most being what he called “sole director” entities with no apparent business track record.
“I don’t know what the role of Standard Bank was, but this was an inactive account and all of a sudden there were huge amounts. I don’t know what action was taken.”
Mazibuko said banks were known to monitor client accounts and were generally aware of normal credits and debits such as salary or insurance payments moving in or out of an account in terms of the “know your customer” requirements.
He added that banks were “the first line of defence” and were obliged to know their customers under the Financial Intelligence Centre Act.
When my credit card payment is overdue, my bank makes sure to SMS until I render unto Caesar.
Yet when the Guptas were siphoning off millions being moved offshore, no one seemed to notice.
That is the indifference of the banking sector to millions of ordinary clients like you and I. Miss a payment and you are placed on a rote AI debt collection bot.
Move millions and…
Banks spend fortunes on silly marketing videos, soppy advertising, and other costly “bumf” to extract and inculcate brand loyalty, while in truth, the existence of “bank rage” and the enormous frustration at dealing with the financial sector points to a growing sense of alienation by ordinary clients.
Removing more human beings from that interface will exacerbate this increasingly hollow experience.
Last week this writer found herself clutching a numbered ticket in an overfull branch of a bank in a large city in an attempt to speak to a human being as the AI functions of the institution – at the end of the month – were not operational.
The queue snaked through the shopping centre while three overworked human tellers attempted to deal with the growing, restless crowd.
Seated next to me grumbling, was an older lady who had caught a taxi from Philippi, some 14km away, in order to speak to a human being as she was unable to “do” internet banking.
And while you might argue that there are more cellphones in South Africa and Africa than anywhere else and that services are migrating to this liminal digital space, this excludes and alienates millions of clients for whom data and connectivity is costly and problematic.
Over and above this, banks have not been able to prevent online banking fraud. Digital fraud soared by a whopping 75%, the Banking Risk Information Centre reported in June 2019. The cost of this digital fraud in 2018 was R262.8-million. In 2017, the largest increase was related to bank app fraud which amounted to R104.8-million.
And you want to force us to migrate online and get rid of around 2,700 breadwinners in the process while you cannot guarantee online security?
The removal of a human interface for clients when it comes to the highly personal matter of money and banking, should be a major consideration when it comes to banks factoring in customer satisfaction and loyalty.
Technology might be with us, it might cost the banks less, but in the long run, adding to the appallingly high unemployment figures in a country like South Africa, which has had its development arrested by predatory political and economic elites, is morally reprehensible.
The minor collateral damage to the healthy profits of the bank weighted up against the devastation of unemployment of those bank employees who will lose their jobs, cannot be compared.
So, how do we, as fellow South Africans of those employees about to be axed, let our banks know how we feel?
Start a petition online, send emails to head offices in your personal capacity, offer a word of comfort to that human being behind the counter. Whichever way, make your voice heard.
At Daily Maverick, we are keen to engage readers about your banking experiences, considering the huge push to cut rents and other costs through closing branches or the removal of human beings from our interface with our money.
In these mad, bad times, it cannot be business as usual.
If these two banks alone have their way, at least 2,700 breadwinners will be out of a job, affecting thousands of families, never mind removing their salaries from circulation in the shattered South African economy. DM