No need to hold back as banks fall from grace

Banks have gone from hero to zero in a matter of days. Perched (perhaps precariously) on the high ground since the big four closed the bank accounts of companies owned by the Gupta family and backed Finance Minister Pravin Gordhan in a case against the family, this week they slid rapidly downhill into a muddy swamp called currency manipulation.

The Competition Commission has referred a case of collusion to the Competition Tribunal for the prosecution of local and foreign banks over allegations that foreign- currency traders at these banks conspired to fix prices and divide markets in dollar-rand trading.

Move over steel and construction companies, there is a new gang of villains in town. And Ford must be relieved that attention has been diverted elsewhere.

FirstRand and Nedbank have not been named in the Competition Commission's probe, but in the court of public opinion that is just an inconvenient fact that should not get in the way of all banks being smeared in equal proportions.

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Already this week banks have been called a criminal gang by Black First Land First and been condemned by the SACP, and Cosatu is appalled.

So should we all be appalled by these people who - already earning high salaries for the job they are employed to do - defraud clients to line their own pockets.

But the banks for which they work can't be let off the hook - through pay incentives they have allowed a culture of greed to fester.

Save South Africa took a mealy-mouthed approach, perhaps not wanting to annoy any potential benefactors. Contrast its statement about the case against the banks this week, which "commended", "welcomed" and "implored", to a statement it issued ahead of the state of the nation address in which it was "angry and gatvol".

The Banking Association South Africa took an equally timid approach.

But not the National Treasury, which said: "If proven to be true, it would confirm the pervasiveness of unbridled greed within the ranks of the forex trading sections of banks, even after evidence that such behaviour has potential to collapse national and global financial systems and bring about immeasurable pain to ordinary people, as evidenced by the deep recession of 2008-09 which was triggered by banks conducting their business recklessly. This has to be punished and brought to an end!"

The exclamation mark is the Treasury's. Not sure I have seen that before on a statement from it.

Absa, Citigroup and Barclays helped the commission and without their assistance it seems this little band of traders might not have been exposed.

As for the other banks, which may now be scrambling to offer up a scapegoat to avoid a hefty fine, well, that ship looks like it's sailed.

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Of the implicated banks' combined hundreds of thousands of staff in South Africa and the US - where most of the collusive dealings happened - it's taken the actions of a few people to expose the shortcomings of these companies.

In many cases it was just one dealer at each bank working with other individual dealers at competitor banks to help each other make the perfect trades, yielding profit for the bank they worked for and a tidy little sum for themselves.

The 10% of annual turnover the commission wants banks to be fined will hurt the banks, but not much.

Most consumers may not have been directly and immediately hit by the greed of these traders. But it will be felt when the banks, having paid the fine and wanting to recoup it, look to where they can add a bit here and a bit there to fees and interest rates they charge their clients .

enslins@sundaytimes.co.za

Enslin-Payne is deputy editor of Business Times