President Jacob Zuma told parliament on Thursday the government
would come down hard on the local banks accused in a report by the competition watchdog of rigging the rand currency.
“This matter is still under investigation… government is ready to act
against market abuse, price fixing and collusion in the private sector
in order to protect our country’s economy.”
This article by Stuart Theobald on MoneyWeb Today is an interesting assessment on the current banking furore, banks collude on rand trading
No fear for the banks we love to hate
The announcement by the Competition Commission that it will refer 17 banks to the Competition Tribunal for prosecution has caused quite a disturbance on social media. The markets themselves, however, have barely noticed. Standard Bank’s share price, for instance, actually closed up half a percent on the day of the announcement, despite both it and its New York subsidiary being named and tabled for a fine of 10% of their turnover since 2007. That would be enormous and render it, and most of the other banks mentioned, insolvent. If that was a realistic prospect, you can be sure that share prices would be plummeting.
So why this enormous gulf between public opinion and market reality?
There are two reasons. First, public opinion is currently extremely “hot” around banks in general. It is hard not to pin some of this emotional temperature on the spat between the banks and the Gupta family following their closure of all the Guptas’ accounts. There is a well-orchestrated campaign including hordes of Twitter “bots” put to the task of fanning negative publicity against the banks. Much has been made about the timing of a report from the public protector regarding the Bankorp lifeboat, that seemed to feed this effort, and there are already questions in the market about whether the Competition Commission has similarly been yoked.
Read the article HERE
Treasury said the allegations, if proved to be correct, point to poor market conduct practices at such offending institutions.
“This is precisely the type of abuse the National Treasury had in mind in 2011 when proposing the coming Twin Peaks reform to put in place a new market conduct regulator to ensure that all financial institutions treat their customers fairly and operate with the highest ethical standards.”
The bill aims to establish a new prudential regulator under the helm of the SA Reserve Bank (SARB) that will be responsible for regulating all financial institutions – banks, insurance houses and the asset management sector.
Currently the Financial Services Board is overseeing the conduct of insurance houses and asset managers, but in future the body will cease to exist and a new body will be formed in its place, tasked with regulating market conduct and protecting consumers.
With the Twin Peaks Bill, Treasury wants to increase protection of South African consumers and regulate market conduct, while at the same time creating a more stable financial system. See Fin24