Bank South Africa Law

Bank South Africa Law

By Amelia Stenson

Bank South Africa law is effectively defined by the 1990 Banks Act and simply covers exactly what a bank is allowed or not allowed to do in the normal course of business.

Bank South Africa law is complex

There are a myriad of other complex bytes of legislation that pertain to bank South African law but these are often so multifaceted that expert advice is required from specialist banking law attorneys. Examples of added legislation that governs bank South Africa's law are:

• The Exchange Control Act
• National Credit Legislation
• The Financial Intelligence Center Act
• The Prevention of Organized Crime Act
• Bills of Exchange Act

Leading Cape Town law firms offer a range of services pertaining to banking law, including advice on BEE specifications, advice on the acquisition of certain assets, leveraged and acquisitions finance, debt capital market and corporate bonds, structured finance, foreign representation, takeovers, insolvency and banking, and financial services regulation.

Common international banking instruments and requirements

Although banking law varies from country to country, there are a number of instruments and requirements that are applicable across the board, including:

• Capital Requirement - an outline of how all banks must handle their capital in relation to their assets.
• Corporate Governance - a framework intended to keep banks well managed.
• Credit rating requirements - the vast majority of international banks are required to obtain and maintain a minimum credit rating from an approved credit rating agency and to willingly disclose this to investors and prospective investors.
• Reserve requirement - the minimum reserves the banks must hold to demand deposits and bank notes.
• Financial reporting and disclosure requirements - all banks are required by law to prepare annual financial statements acceptable to a financial reporting standard, to have them independently audited and to open them to public scrutiny.

The objectives of Banking Law

In this day and age when leading international banks are hitting the skids, the objectives of banking law are all the more important. There are five primary objectives:

• To be prudent with a depositor's money by reducing the risks bank creditors are exposed to
• To avoid the misuse of banks by criminal elements
• To protect the confidentiality of banking and banks
• To direct credit to preferred sectors
• To ensure systematic risk reduction