Banks in the dog box

Jo-Maré Duddy

Allegations of unreasonably high and unfair prices relating to the home-loan process, discriminatory conduct and the historic fixing of interchange rates have resulted in the Namibian Competition Commission (NaCC) launching two investigations into the local banking sector.

The NaCC is probing the Bankers Association of Namibia (BAN), Bank Windhoek, FNB Namibia, Nedbank Namibia and Standard Bank Namibia for “possible discriminatory conduct”, the watchdog said in a statement on Thursday.

Discriminatory conduct in this context means the banks allegedly apply “dissimilar conditions to equivalent transactions” in the provision of fire insurance for home loans, the NaCC said.

Discriminatory conduct is further alleged in that the banks apparently charge home loan clients an additional rate on top of interest rates determined as per the client’s financial profile, if such client has his/her main transactional day-to-day account with a competing banking institution, the NaCC said.

It is also alleged that the above-mentioned banks charge “unreasonably high and unfair prices for the provision of ancillary services being the issuing of a home loan pre-approval letter and bank confirmation letters”, the watchdog said.

DOMINANT POSITION

The NaCC alleges that the banks hold a dominant position in the relevant market. The banks’ alleged conduct amounts to possible contravention of the Competition Act of 2003 in as far as restrictive practices prohibited and the abuse of dominant position are concerned.

Market Watch on Friday asked Bank Windhoek, FNB Namibia, Nedbank Namibia and Standard Bank Namibia to comment on the NaCC’s allegations. By the time of print yesterday, only FNB Namibia and Nedbank Namibia had responded.

The communications manager of FNB Namibia, Elzita Beukes, said the bank “notes the NaCC’s intent to investigate all Namibian banks as is its right, but cannot comment on any ongoing investigation at this time”.

According to the head of marketing and communication at Nedbank Namibia, Gernot de Klerk: “We have always been guided by our supreme ethics in treating our clients fairly, and do operate in the most regulated business sector in our country.

“We will engage with the relevant industry bodies and the Competition Commission in good faith with the ultimate aim of resolving the matter. We remain guided by the principles of customer centricity that we as Nedbank subscribe to and hold in high regard,” he said.

RATE FIXING

The NaCC has also launched an investigation relating to the alleged historic fixing of interchange rates through the Payments Association of Namibia (PAN) by commercial banks.

This investigation includes PAN and all registered commercial banks comprising of FNB Namibia Banco Atlantico Europa: Namibian Branch, Bank BIC Namibia, Bank Windhoek, Letshego Bank Namibia, Nampost Savings Bank, Nedbank Namibia, Standard Bank Namibia and Trustco Bank Namibia.

Explaining its motivation, the NaCC said it issued an advisory opinion to PAN, upon its request, in April 2018 regarding the collaboration by commercial banks on the interchange fees. An interchange fee refers to the charges payable in respect of a credit/debit card transactions, whereby a payment is made by a customer of one bank to a customer of another bank.

ENGAGEMENT

The NaCC concluded that such collaboration gives rise to potential price fixing as envisaged in the Namibian Competition Act and advised PAN to apply for exemption in terms of the Act.

“This, PAN undertook in August 2019, for consideration by the Commission. In its application PAN accepted that the interchange model, adopted by its members, fixes interchange fees agreed between Namibians banks through its Payment Clearing House Card Schedule,” the NaCC said.

The watchdog continued: “This conduct has been ongoing for a number of years until the time when the exemption application was granted with conditions in October 2020. Such practice by the commercial banks amounts to a possible contravention of Section 23(1) read together with Section 23(2)(a) and Section 23(3)(a). To that effect, the Commission resolved to initiate an investigation into the alleged historical conduct in the relevant market.”

The NaCC has engaged all the affected parties and afforded them the opportunity to respond to the allegations.

“Upon receipt of the responses to the allegations, the Commission will conduct an assessment and stemming therefrom, determine the relevant cause of action,” it said.