Client de-banking is not new, rare – or acceptable

• Published date: 04 August 2023
• Author: THE arbitrary closure of personal and corporate bank accounts by financial institutions, defined by the ugly euphemism “client de-banking”, is neither a new phenomenon nor rare.
• Publication title: Mercury

In 2021, for instance, Absa and FNB unilaterally terminated the bank accounts of all business enterprises linked to Sekunjalo Investment Holdings, a 100% broad-based BEE company, ostensibly to avoid reputational damage following allegations about Sekunjalo’s investments with the Public Investment Corporation, which the holding company robustly denied

The arbitrariness belies the fact that it was made as a pre-emptive move without giving due process to any potential court proceedings, and the banks’ seeming moral inconsistency in their choice of corporate clients.

The Sekunjalo Group and its chairman, Dr Iqbal Survé, are embroiled in several legal cases against nine of South Africa’s largest transactional banks, whom he has accused of discriminatory practices against him and the companies in which he is involved.

In an interview with Business Report a few days ago, he lamented the “lack of transformation” in the country’s “monopolistic financial sector” and “lack of inclusivity” in the capital markets through appropriate financial instruments, especially those aimed at democratising access of black South African businessmen and entrepreneurs to finance and support.

The perception that banks are “a law unto themselves” is shared, in general, by several other key sectors of the economy, including government bureaucracies, financial services, airlines and other transport segments, and usually utilities – energy, water, telecoms, sewage, and so on. Whether they are privatised or state-owned is immaterial.

Collectively, they exude a patriarchal sense of entitlement, often coupled with dysfunctional leadership in management, sometimes tempered by a breath-taking lapse of judgement, seeking refuge like scoundrels behind the law, rules of engagement, ineffective regulation and political expediency disguised as national interest, state security, corporate secrecy, undeclared protectionism, data protection under privacy laws, and even intellectual property considerations.

It makes a mockery of the adage that “the customer is always right”, because the odds are heavily stacked against them – the ecosystem, corporate architecture and culture is opaque and grossly inequitable.

When that customer is the supreme attention-seeker Nigel Farage, the apostle of Brexit, pushing back against Coutts Bank, the establishment private bank of the late Queen Elizabeth II, Russian oligarchs, Middle Eastern potentates and the global mega rich, where the minimum deposit to open an...