Last week was difficult. Standard Bank was once again publicly accused of currency manipulation, of being opposed to the South African government, and – in some quarters – even of treason.
Standard Bank has not manipulated the value of the Rand.
Standard Bank has not engaged in any anti-competitive or criminal conduct. Standard Bank is committed to always behaving with complete integrity.
However, in a strange and painful way, last week was also a very good one for those of us who care about South Africa’s rule of law, democracy, and economic performance. Here’s why.
Under our rule of law, the relevant legal and administrative processes are not thrown off course by dramatic statements and viral social media messages. The Competition Appeal Court continues to hear evidence on the alleged Rand fixing case, with one of the judges asking, in relation to Standard Bank ‘What is the point of pursuing this? And, surely there's massive injustice to a bank to be hauled in front of the Tribunal on a cartel case, where in fact there's plausible evidence – more than plausible, incontrovertible evidence, that they're not part of the deal?’
The Reserve Bank, too, continues to exercise its mandate. Relatively soon after these allegations were first made, in 2015, the Reserve Bank found ‘no evidence of malpractice or serious misconduct in the South African foreign exchange market… [and that] the foreign exchange market in South Africa is competitive.’ This month, the SARB released a technical paper showing that convergence in Rand markets is ‘in the main, a rational response to public information, indicating central bank credibility.’ and the lack of collusion in being able to manipulate the Rand. These kinds of legal and technical processes don’t make the headlines. But, in the end, they are what counts. In South Africa, rationality will prevail.
The week demonstrated the health of our democracy in general – and of our free media and social media in particular. Voices alleging illegal and unpatriotic behavior by the banks were robustly challenged. Nobody was silenced. Nobody will be silenced. As befits our democracy, vigorous debate continues. As an additional benefit, curious South Africans were given a very comprehensive crash course in how foreign exchange markets work. It wasn’t pretty, but we all emerge with our rights reconfirmed, and better informed about these complex markets.
This controversy also gives Standard Bank another very welcome chance to explain to our fellow South Africans how we think and what we do.
The first thing to emphasise is that Standard Bank never hides behind legal tactics or claims of confidentiality, unless any particular matter is before the courts and is sub judice. When we discovered in 2015 that some employees of our subsidiary in Tanzania had committed crimes, we immediately self-reported this and accepted the fines and sanctions. When we discovered that some employees had opened accounts unethically (but not illegally) in South Africa in 2020, we were transparent while the matter was being investigated and informed all the affected parties. Our track record shows that if we had done anything illegal in the foreign exchange market, we would have admitted and reported it immediately.
We’re not playing for time or looking for a deal. When we say that we are innocent of currency manipulation, we mean it. We will not settle. Where we find that our people have engaged in wrongful conduct, we will act swiftly and will work with the relevant authorities. Where we find no evidence of wrongdoing, we will protect and defend our people - our most valuable assets.
Next, we put a lot of time and resources into promoting more investment and faster growth in South Africa. Standard Bank’s long term performance depends on the success of the economy and on the economic wellbeing of our clients.
As several cabinet ministers will be able to confirm, last month alone, we were among the main sponsors and main speakers at two major conferences – SA Tomorrow and the AGOA Forum - devoted to encouraging investment in South Africa. We do this by emphasising South Africa’s fundamental stability, strong rule of law, economic resilience, competitiveness, and improving prospects - thanks in large part to structural reforms that the government is implementing.
We’re patriots who would never undermine this country. But we won’t sit back idly either or toe the line. As South Africa – and Africa’s – largest private sector financial institution, we believe we have a right and a duty to comment on economic and financial sector policy. When we see errors, or opportunities to do better, in these areas we call them out. For instance, we will continue to argue vigorously for the reforms needed to improve South Africa’s competitive advantages, to reduce the cost of capital, and so to accelerate growth and job creation. Right now, for instance, faster reforms to the transport sector, far wider use of public-private partnerships across the public sector, and more effective law enforcement are top of our list. Since banks depend on trust and on contracts, a strong rule of law is absolutely vital to us.
But we will never comment outside our mandate. And we will never make a statement for, or against, any political party or individual politician. We exist to serve the economic development of South Africa and to help South Africans flourish. All South Africans. We don’t take sides. We stand on the side of sound universal principles that seek to advance the cause of ordinary people, the Constitution and the rule of law.
We do everything in our power to support our clients through good times and bad. We are always looking for ways to increase the financial and economic inclusion of our fellow South Africans and Africans. Everything we do emerges from this perspective, and all our activities aim to create sustainable growth and inclusive value.
For example, over the first half of this year, we kept R1.8 trillion in deposits safe for our clients, and we paid R45 billion in interest on those deposits to the individuals, corporates and governments who entrusted their savings to us. We managed R1.4 trillion in assets – which is mostly money that people are saving for their pensions or that they are relying on in retirement. Over the first half of the year, we also paid out more than R11 billion to clients in annuities and for death and disability claims.
At the end of the first half of 2023, we held a stock of R1.4 trillion in loans. Our aim is that each loan brings people closer to realising their aspirations. For instance, we lent R22 billion to small and medium enterprises across Africa to grow their businesses, and we registered R1.4 billion of affordable housing loans in South Africa, bringing the number of clients we have provided loans to for affordable homes to more than 98 000.
Last year, we spent R12.5 billion with black-owned suppliers, and paid R6.5 billion in tax to the South African government. Through our membership of the Banking Association and Business Unity South Africa, we are strong supporters of the government-business collaborations on energy, logistics and tackling crime and corruption. Many of our colleagues lend their skills and time to improve the performance of SOEs and other important public entities.
Finally, as I write this during a weekend of stage 6 loadshedding, I’m pleased to say that Standard Bank has so far funded nearly 4000 MWh of new electricity generation in South Africa – that’s equivalent to four stages of loadshedding once it all comes online. Far from undermining South Africa we are, literally, helping to keep the lights on.
No matter what anybody says or thinks about us, that’s not going to change. As proud and committed South Africans, we will always uphold our Constitutional obligation to ensure that our country ‘improves the quality of life of all citizens.’ We will continue to seek out opportunities to work with all stakeholders to fulfil this obligation.
Sim Tshabalala is the CEO of Standard Bank.