PASA
Annual Report - 2002 (tba)
CHAIRMAN’S
REPORT
As a result of the liquidity pressures experienced
by some smaller banks at the
beginning of 2002, the Payments Industry
lost a number of participating banks during that
period. CorpCapital Bank Limited relinquished
its banking license and BOE Bank
Limited and Old Mutual Bank Limited were amalgamated
with Nedbank Limited.
Saambou Bank Limited, which was the trigger for
the events, was put under Curatorship,
but still retains its banking license and its
membership of PASA for the time being while
under Receivership.
These events put a sharp focus on the actions
to be taken by participating banks in the
event of a member of a Payment Clearing House
being placed under Curatorship.
An extensive plan of action, aimed at proper
communication during a crisis event was
one of the major deliverables of the year. The
plan resulted from the experience and insight
gained during the crisis and is aimed at ensuring
proper communication between
the various role players during such an event.
Also, it allocates accountability and
responsibility for the proper management of the
processes required to protect the
payment system and the interests of the surviving
participants in the Clearing House and
thus the public at large.
Of particular significance was the publication
of a book entitled “SMES’ access
to
finance in South Africa – a supply-side
Regulatory Review” by a Task Group chaired
by
Hans Falkena, which was written without consultation
with banking practitioners. This
was followed soon after by another report entitled “ Establishing
Narrow and Core Banks
and their competitive impact on fully fledged
banks in South Africa”. Both these
documents were presented to the Financial Services
Policy Board.
As a result of this PASA participated in a Policy
Board sub-committee led by the South
African Reserve Bank, which investigated the
issues raised in this report. Certain issuesrelated
to access to the National Payment System in South
Africa and in particular to
persons who are not Clearing Banks. Whilst it
was acknowledged that there are certain
issues relating to access to the National Payment
System many so called “issues” are
perceptions created by either a lack of understanding
or a lack of correct information.
The sub-committee evaluated and addressed these
issues and perceptions. A number of recommendations
have been made.
However, the recent “near banking crisis” in
South Africa should be borne in mind when
making changes to the current system, particularly
in the case where provision is made
for the entry of second and third tier banks
or even non-bank payment service providers
in an attempt to overcome the perceived barriers
to entry of the National Payment
System. Care needs to be exercised when assessing
whether the requests being made
of the Payments System are realistic and are
within the context of best practise. For
instance, there is the example of an organisation
requesting direct access to the EFT
Debit PCH for a total of approximately three
hundred transactions a year when the
electronic funds transfer system for debits currently
accommodates one hundred and
ninety four million transactions per year. The
context of such a cry needs to be taken
into account.
In its deliberations the industry has indicated
its willingness to work together with any
commission or other body, constituted to address
the issues contained in the reports.
They offer the skill and knowledge that the banks
possess in respect of payment
systems in order to evaluate the issues and perceptions
of people currently not
participating within the existing framework.
The sub committee also recommended that a growth
plan for small banks be facilitated
so as to enable more participants to provide
facilities to the market. PASA and its
member banks are currently involved in creating
such a growth plan. This is likely to
commence with sponsorship assistance until the
bank has proved its capability in
respect of management of finance, liquidity,
business operations and risk. A system of
mentorship for such new participants already
exists.
The payment system and its various sub-systems
performed near faultlessly during the
year, processing nearly 800 million transactions.
The fact that this is not a news worthy
item is a credit to the operators, the participants,
the management body and the
regulator. Had this not been the case, risks
would have manifested themselves, which
could have impacted significantly on the R38.1trillion
worth of payments effected during
the period. Our congratulations for this achievement
go to all those concerned.
In conclusion we wish to place on record our
sincere appreciation of all the hard work
done by the PASA Chief Executive Office and his
team, the PASA sub-committees and
the PCH Participant Groups as well as the National
Payment System Division of the
South African Reserve Bank. Without the effort
and commitment of these people the
significant achievements of the past year would
not have been possible.
PETER SCAIFE
Chairperson
