Manuel takes Barclays - Absa bid approval off regulators hands
April 6, 2005
By Sherilee Bridge-David
Finance minister Trevor Manuel has taken control of the approval process in Barclays` bid for Absa by invoking laws that allow him to bypass competition regulators.
`The minister has decided to withdraw the commission`s jurisdiction relating to this transaction,` Zodwa Ntuli, the manager of compliance at the competition commission, said yesterday.
This means Manuel may now decide to approve Barclays` acquisition of a controlling stake in Absa without considering the anti-trust panel`s findings.
The competition commission submitted its recommendations on the proposed transaction to Manuel 10 days ago.
`The transaction itself didn`t raise any competition concerns,` Ntuli said.
Manuel outlined to the banks the terms under which he would allow the transaction at the weekend. While he did not reveal details, economists said yesterday the limiting of systemic risk was sure to be at the top of the list.
Approval of the bid could bring as much as R25 billion into the country and would mark a shift in the government`s policy of keeping the country`s four biggest banks under local ownership.
Reserve Bank governor Tito Mboweni suggested in November that a new supervisory regime would have to follow the internationally-agreed framework of `home-host` banking supervision set out in the Basel Concordat.
This emphasises the responsibilities of country authorities in the supervision of foreign owned banks.
Alan Bollard, the governor of the Reserve Bank of New Zealand, warned in October that extensive foreign bank participation in a banking system could complicate the supervision of banks in the host system, particularly if core functionality was outsourced to parent banks.
`Despite the benefits that foreign ownership and capital bring, these features mean that any banking crisis New Zealand faces is as likely to be caused by external influences as it is internal,` Bollard said.
Goolam Ballim, group economist at Standard Bank, said the financial industry was incredibly important to South Africa`s economy.
`There is no doubt that the terms of discussion between the government and the banks would have been South Africa-friendly, that is pro-poor and pro-growth,` said Ballim.
Absa shares lost 65c to close at R76.40 yesterday, while the banking sector declined 1.70 percent.
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