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South Africa
Greedy banks under the spotlight
An official enquiry into bank fees finds South African banks cream more off the top than banks anywhere else in the world. Is this why they are the world’s most profitable?
Tom Nevin investigates
South Africans have long been victim to high prices for food and other consumer goods and services – and the reason has little to do with the latest round of global price hikes. As a flood of evidence is now showing – thanks to a terrier-like investigation by the South African Competition Commission (SACC) – local companies are ripping off their customers in everything from bread and milk to pharmaceuticals and airline fares and a whole lot more besides.
Now the SACC is having a field day and manufacturers and service providers from every nook and cranny in the economic landscape are running for cover. Some have had to pay millions of rands in fines. The SACC has nailed offenders with massive fines – South African Airways was slapped with a penalty of R100m ($13.9m) for abusing its market dominance, Tiger Brands had to pay $11.13m for fixing the price of bread and its sister company, pharmaceuticals manufacturer Adcock Ingram, was fined $7.37m for collusive tendering. South Africa’s banks have so far escaped indictment for abuse of market dominance but, hard pressed customers are hoping, the noose is tightening.
‘Big Four’ banks in commission’s sights
A 22-month long probe into bank charges by the SACC’s Banking Enquiry Panel has concluded that bank charges are too high and accuses the ‘big four’ – Absa Bank, Standard Bank, First National Bank and Nedbank – of using complex fee structures to abuse their market power. The enquiry has also found that there is a distinct lack of competition in the sector and that bank charges are higher than they would be at competitive levels. It further found that banks use “information asymmetries and product complexities” to abuse their power.
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