Bankers to meet SARB

South African bankers are trying to set up a meeting with the country’s Reserve Bank governor Tito Mboweni to discuss his request that they reconsider the margins between their lending rates and the central bank’s official repo rate.

The request was not put directly to the banks, but in comments at a presentation of the central bank’s monetary policy review last week.Bloomberg reported the governor saying: ‘There is nothing that says the spread must automatically be 3,5 percentage points.’ At present the banks set their benchmark prime rate at 12 per cent, while the repo rate is 8,5 percent.Cas Coovadia, the managing director of the Banking Association of SA, said on Monday day that he had requested ‘a high-level meeting’ with the governor. ‘This is something we dealt with a few years ago and we didn’t realise there were outstanding issues.’Mboweni was unavailable on Friday or Monday to clarify his comments.Banks point to his annual statement to shareholders in August 2001 to justify the convention of keeping a spread of 3,5 percentage points between the two rates. At the time, the prime rate was 13,5 percent.Mboweni said in his speech that the repo rate would ‘be lowered’ to 10 per cent on September 5 for purely ‘administrative’ reasons and on that occasion, banks should not adjust their prime rates.However, referring to future changes to the repo rate, he said they would be ‘a signal that the bank expects money market interest rates to show corresponding changes’.In other words, the rates would be expected to move in tandem.-Business Report