Bank profits at the cost of ethics?
CEO fat cats earn millions of rands in salaries.
South Africa's financial landscape is currently marred by a glaring disparity. On the one side, major banks – think Standard Bank, Absa, FirstRand, and Nedbank - are celebrating record-breaking profits and substantial contributions to the country's economy.
On the other, they appear to be self-sabotaging these efforts by de-banking or un-banking multiple companies and individuals.
As we all should know by now, the banks claim a purported 'reputational risk' to their own reputations if they continue to bank Sekunjalo and all its related companies – many of whom the business world and the public had no idea were linked to the Group.
Consequently, moves are afoot by all the major banks, and then some, to de-bank the entire group
This claim (of reputational risk) can surely not be taken seriously, especially when analysed against the backdrop of these banks' obscene takings and profits.
In an era where banks have consistently reported massive earnings, and CEOs enjoy million-rand salaries - the argument rings hollow.
The Sekunjalo Group, an established and successful entity, has been subjected to undue pressure and threats, raising serious questions about the integrity of these financial institutions.
PwC's Major Banks Analysis Report paints a picture of opulence and success for South Africa's major banks.
Their combined headline earnings soared by 16.8% to a staggering R55.8 billion in the first half of 2023.
These profits were bolstered by higher interest rates, digitalization efficiencies, and market volatility, underlining the robust financial health of these institutions.
Standard Bank, Absa, FNB and Nedbank posted not only significant income and profit increases but exceptional growth in their headline earnings per share – up 33% in the case of Standard Bank.
The jockeys riding these thoroughbreds also reaped the rewards for their respective performances, with Standard Bank’s CEO, Sim Tshabalala, coming out tops, romping home with a staggering combined salary of R49.38 million.
Absa and Nedbank were not far behind, with FNB coming in at the lowest annual package worth a paltry R31.55m.
However, this prosperity stands in stark contrast to the banks’ ethical conduct under the leadership and guidance of these big bucks earners.
The threat of closure of any bank account other than as required by law or regulation, is reprehensible.
De-banking impacts families, employees, and communities, and contradicts the banks' social responsibility among other travesties.
At what cost are these profits being made if they come at the expense of ethical business practice and fairness?
As the 'Big Four' banks continue to amass profits, and their leaders remain at the helm of these corporations, they must be held accountable for their actions.
The alarming disconnect between financial success and ethical behaviour should no longer be ignored.
Adri Senekal de Wet is the executive editor of Business Report.
BUSINESS REPORT