South Africa will come down hard on financial market abuse, President Jacob Zuma said on Thursday, following accusations that more than a dozen local and foreign banks had rigged rand currency dealing. The Competition Commission said on Wednesday it had found the banks, including US, European, Japanese and Australian lenders, had colluded to coordinate their trading activities when dealing in the South African and US currencies.
With the banks already a target for public anger, Zuma piled on the political pressure. "Government is ready to act against market abuse, price fixing and collusion in the private sector in order to protect our country's economy," he told parliament. South Africa's economy, which has hardly grown since emerging from a recession in 2009, remains largely in the hands white minorities more than two decades after the fall of apartheid. Of the four biggest lenders, which control more than 90 percent of the country's banking market, all but Standard Bank have white chief executives.
The ruling ANC party on Thursday called for the toughest possible sanctions against the banks."The African National Congress takes an extremely dim view of the activities of the listed banks. These acts of corruption have crudely exposed the ethical crisis in the South African banking sector," the party said in a statement.
"It is further an indication of how the markets are and can be manipulated by dominant oligopolies to cripple its functioning to suit their nefarious agendas." The National Treasury said it viewed the report seriously and that if found guilty the banks should be sanctioned accordingly. "We view this matter in a very serious light and welcome any steps taken against wrong-doing by any financial institutions," the Treasury said in a statement.
South Africa's banking index fell as much as 1 percent after the Commission, which has been conducting an investigation since April 2015, recommended heavy fines be imposed on the lenders. By the end of session, the index had recouped all the losses. Financial regulators are clamping down worldwide, with dozens of traders fired and big banks fined around $10 billion in total in separate cases for rigging the level of the Libor interest rates and other market benchmarks. The opposition Democratic Alliance accused the ANC of politicising the issue, saying ministers want "to do battle with the banks, regardless of the economic fallout".