Banking

Finance and insurance are two of the most important components of the Western Cape economy. The two sectors together comprise 17.5% of the Western Cape’s gross domestic product (GDP). Growth patterns of 6.6% (2007) and 5.6% (2008) in the broader category of finance and business services helped the provincial economy grow during this time at a faster rate than the national average.

The South African Reserve Bank oversees the banking-services sector, while the Financial Services Board governs the financial-services industry. South Africa’s principal financialservice markets include the national stock exchange, the JSE Ltd, and the Alternative Exchange (AltX), the SA Futures Exchange and the Bond Exchange of South Africa (Besa).

Banking
The retail banking sector’s Big Four – Standard Bank, Nedbank, Absa/Barclays and First National Bank – have a strong presence in the Western Cape. The sector can accommodate the most demanding needs of business and foreign investors. In addition, legal services are excellent and readily available. Competition is stiff among the major players, especially as they develop new strategies to incorporate South Africa’s emerging second economy.

Several smaller banks offer specialised services to specific target markets. Capitec Bank for example, based in Stellenbosch, was formed by micro-lending group PSG to focus on loan financing for smaller amounts.

Insurance
The Mother City is the second-largest financial centre in the country, and is home to several of the largest insurance companies in South Africa: Metropolitan Life, Liberty Life, Sanlam and Santam. Old Mutual has a huge presence in the garden suburb of Pinelands, although this office only retains some administrative functions of the head office, which is now based in Johannesburg.

The effects of the global recession were not so keenly felt in life insurance and investment management in the Western Cape, according to a survey conducted by the Bureau for Economic Research at the University of Stellenbosch. The survey noted that with risk aversion declining and net inflows recovering in the first half of 2009, the sector was not as badly hit as might have been expected. In addition, the province does not have a predominance of retail and investment banks – which were worst affected by high non-performing loans.

However, many small and medium enterprises fell behind with their premiums during 2009, or defaulted altogether and went under. Liquidations for the seven months to July 2009 rose nationally by 35.8% to 2 379.

ONLINE RESOURCES
Actuarial Society of South Africa: www.assa.org.za
Banking Association South Africa: www.banking.org.za
Financial Services Board: www.fsb.co.za
Institute of Bankers in South Africa: www.iob.co.za
Office of the Auditor-General of South Africa: www.agsa.co.za
South African Institute for Chartered Accountants: www.saica.co.za
South African Reserve Bank: www.resbank.co.za