South African banks’ rates to be investigated

JOHANNESBURG – South Africa’s central bank and leading commercial banks are to form a technical committee to look into issues relating to the spread between the repo and prime lending rates, the Reserve Bank said on Friday.

Central bank Governor Tito Mboweni met with the banking association on Thursday to discuss his recent criticism of lenders always keeping the same differential – 3,5 percentage points – between the two rates.’The primary purpose of the meeting was to discuss the spread between repo and the prime lending rates,’ Mboweni said. ‘It was agreed that a technical sub-committee would be established to look into the issue and other related matters further, and report back to the group as soon as possible.’ The sub-committee will be convened by Cas Coovadia of the Banking Association SA and senior Reserve Bank official Roelf du Plooy. Earlier this month, Mboweni said he would meet chief executive officers of SA’s top commercial banks to discuss lowering the interest rates they charge consumers.He contended that SA’s banks were not necessarily passing on the benefits of repo rate cuts to consumers. – Sapa and Reuters