JOHANNESBURG – Standard Bank’s CEO, Sim Tshabalala, says the bank is not setting aside any cash for a potential Competition Tribunal fine for alleged collusion by its currency traders as internal investigations have not revealed any wrongdoing.
“We’ve trawled chat rooms, phone calls; we’ve gone through thousands of records and have not come across any [collusion]. [The traders] have been very clear that they are not guilty of any form of collusion,” Tshabalala said on Thursday after delivering the group’s annual financial results.
The investigation by the Competition Commission, which sought to prosecute 18 global and local banks for collusion among their currency traders to fix prices on rand to dollar trades, related to three people, he said. “We employ 55,000 people.”
One of the traders, Jason Katz, had entered into a plea bargain with US authorities in December, which was unrelated to the period in which the Standard Bank Group employed him, Tshabalala said.
Katz had stopped working for the bank in June 2010.
The bank had no basis on which to suspend the other two traders. “If anyone has broken the law or behaved unethically they must be held to account, but due process must be followed. We believe firmly in workplace justice.”
The bank would not settle with the Competition Commission or apply for leniency, as rivals Citi and Absa had done. “Give us further particulars [of what we have done wrong] or let’s go to court,” Tshabalala said.
The bank, which employed more than 500 compliance officers and spent several hundreds of millions of rand a year on compliance, traded on client trust, he said. Staff members were locked out of the building for missing compliance training.
Tshabalala will attend public hearings in Parliament later this month on transformation in the financial services sector.
He said he hoped to be given a chance to speak at these “crucial conversations”, which he welcomed as serving to resuscitate “social dialogue” in SA.
“It’s legitimate for people to shout at us in that forum, but they also need to listen to us.”
It was “right” that the banking sector was difficult to enter, considering the high-risk nature of banking, Tshabalala said.
If policy makers wanted to open up the sector they needed to be ready to handle bank failures every few months, as was the case in Kenya, Nigeria and the US, he said.
“Yes, we need to transform, but we need growth. So let’s not do things that sound like they would stimulate faster transformation, but not create growth.” At the same time, growth needed to be inclusive, he said.
SA needed to move towards a more “politically sustainable and economically rational distribution of assets”, which in practicality meant that black people had a greater share of assets and income, Tshabalala said.
A state bank was a “thoroughly bad idea”, he said, due to the risk that a “confused mandate” led to lending based on political rather than commercial reasons and placed pressure on state finances.
Standard Bank’s share price jumped on Thursday on betterthan-expected results, closing 6.54% stronger at R155.95.
The group reported a 4% increase in headline earnings to R23bn for the year to December 2016. Headline earnings from banking activities climbed 9% on strong operational performances from its two biggest divisions: personal and business banking, and corporate and investment banking.
A 10-point action plan, premised on closer co-operation between the two entities, would help the bank’s majorityowned insurer Liberty recover in the short-term and re-establish its competitiveness in the long term, Tshabalala said.
Liberty contributed R1.5bn less to group earnings in 2016.
“We would expect recovery in Liberty’s earnings, which will add to growth in Standard Bank’s earnings in 2017,” said Andrew Vintcent, port-folio manager at ClucasGray Asset Management. The bank had posted “a very strong result” in 2016. Considerable growth in its rest-of-Africa earnings was encouraging for the longer-term growth prospects of the group.
Earnings from the rest of Africa now contribute 25% to group earnings.