Cape Town - A finding by the Competition Commission that more than a dozen local and international banks colluded to rig foreign-currency trades will bolster government accusations that the nation’s biggest lenders are monopolising the financial system and failing to address racial inequality.
The Competition Commission on Wednesday said banks including Investec, Standard Bank, Bank of America Merrill Lynch, and JPMorgan participated in price fixing and market allocation.
It referred the case to the Competition Tribunal, asking it to declare that the banks contravened the Competition Act and rule that some of them pay fines of 10% of their annual revenue.
“These acts of corruption have crudely exposed the ethical crisis in the South African banking sector,” President Jacob Zuma’s ruling African National Congress said in an emailed statement.
It urged the government to “move with the greatest urgency to diversify the financial services sector, introduce new players and irreversibly transform this industry in favor of the people and the nation”.
South Africa’s five biggest lenders jointly control about 90% of the local banking market, and all of them with the exception of Standard Bank have white chief executive officers - a status quo that has exposed the industry to political criticism.
Zuma has suggested that Standard Bank, Barclays Africa Group, FirstRand and Nedbank may have colluded when they closed accounts operated by companies controlled by members of the Gupta family, who are his friends and are in business with his son.
“Their credibility is now questioned on the issue of currency manipulation, when indeed their credibility is also being questioned in terms of their stranglehold over the South African economy, in the words of President Jacob Zuma,” said Daniel Silke, director of the Political Futures Consultancy in Cape Town.
“This plays into an existing negative narrative about the ethics and role of the big banks in the South African economy.”
“The timing for banks couldn’t be worse,” added Adrian Saville, the chief strategist at Citadel Investment Services & Cannon Asset Managers.
“They’ve been trying to capture the moral high ground on the Gupta issue. It comes at a time when they’re trying to demonstrate impeccable behaviour. It makes a case for intervention.”Fin24's top stories trending on Twitter: Fin24’s top stories