1. National Treasury Presentation to the Portfolio Committee on Communications on the Postbank Bill

2. Contents • Treasury Objectives • Treasury Strategy • Global Financial Crisis • Forms of Regulation • Need for Regulation • Corporatisation • Postal Infrastructure • Inter-departmental Committee on corporatisation • Guidelines to the Bill • End

3. Treasury Objectives • Enhancing competition and stability in the financial sector • Promoting financial access, especially, to the poor • Enhancing transformation in the financial sector

4. Treasury Strategy • Fostering community based financial institutions in terms of the Co-operatives Banks Development Act, • Financial Sector Charter process and the resultant Mzansi account, • Banking Inquiry initiative • Legislation for the development of the 2nd tier of banks (Dedicated Banks Bill)

5. The Global Financial Crisis • The financial crisis has reinforced the need for adequate supervision and regulation of financial institutions • Weak institutions can destabilise the financial system & their economies • Therefore, all financial institutions MUST be regulated • Postbank Not regulated

6. Forms of Regulation • Prudential regulation • Capital, assets, management, earnings, liquidity and solvency per institution and at the macro-level • Market conduct • Pricing and other consumer protection issues

7. Need for Regulation • Regulation and licensing ensure that, amongst other things, the regulator is satisfied that: • the business the applicant proposes to conduct is that of a bank • the business of the bank will be conducted in a prudent manner • the establishment of the bank will be in the public interest • the applicant will be able to establish itself successfully as a bank • the applicant will have the financial means to comply with the banking legislation

8. Corporatisation • The White Paper on Postal Policy (1998) envisaged the Postbank as a viable vehicle for providing banking services to low-income groups & the rural poor in SA • Commercial banks had a low penetration rate in the provision of banking services to low-income groups & the rural poor • As of Dec 2009, 59% of the adult population had a basic bank account

9. Postal Infrastructure • Meanwhile, the Post Office has an infrastructure which reaches deep into rural areas • It is felt that the Postbank should take advantage of the Post Office’s wide outreach • The need for restructuring also got momentum when postal operations of the Post Office were loss-making around 2000/01 • To fund these losses, the Post Office utilised depositor funds in the custody of the Postbank • As a result, the Post Office was recapitalised to the tune of R750m in 2003/4 • It thus became important to “ring-fence” depositor funds from the rest of SAPO operations

10. Interdepartmental Committee • In 2005, the Ministers of Finance & Communications agreed on the vision for the restructuring of the Postbank • They further agreed that their respective departments shall work jointly to manage the corporatisation process • This led to the formation of an interdepartmental committee which comprises staff from the Treasury, DOC, SAPO and the SARB • This Bill is an outcome of the deliberations of the interdepartmental committee • The interdepartmental committee is also facilitating the designation of the Postbank as a payment system participant

11. Guidelines to the Bill • The purpose of this Bill is to give effect to an internal restructuring of SAPO, i.e. converting a division into a corporate entity • Corporatised entity to assume current business of the Postbank division of SAPO, namely: • Deposit taking • Money transfer • Third party payment • Provision is made for the corporatised entity to apply for a licence to operate as a bank (See section 4 of the Bill) • Meanwhile, the Treasury is also working on legislation for 2nd tier banks, which may be more suitable for the Postbank & Ithala

12. Guidelines (cont…) • The corporatised entity shall be owned by SAPO • New business of the corporatised entity shall be determined in terms of its banking licence • Possibly to include lending • Provision is also made for the corporatised/ licensed Postbank to be supervised & regulated by the Registrar of Banks

13. END THANK YOU!!!