When BigNews put these figures to the Banking Council and the banks, they gave the rather feeble response that official currency exchange rates could warp the real costs to consumers. In other words, even if one rand equals one dollar according to the official exchange rate, for example, a loaf of bread may cost R5 in South Africa but $1 elsewhere. BigNews pointed out that the differences in the prices were so large that purchasing power of the different currencies would not change the overall picture: that South African bank charges are very high – possibly the highest in the world – compared to other developing countries. The final argument from the South African banking fraternity was: If SA banks were indeed making so much money, why wasn’t there more interest from international banks in the South African market?
That was just before Standard Chartered announced that it was buying the South African electronic bank 20Twenty, and Barclays announced that it was interested in buying a piece of Absa.
Consumers will be interested to see whether these new international entrants are going to make any difference to our bank charges.
[We asked the Banking Council for comment on this story, but no response was forthcoming by the time we went to print.]
Barry Terblanche is the editor – and one of the founders – of BigNews. He also writes and researches on small business issues for a number of corporate and government clients.