The Namibian Competition Commission has initiated two investigations into the banking sector on account of discriminatory practices.
The investigation involves commercial banks, the Payments Association of Namibia, and the Bankers Association of Namibia.
In a statement released late yesterday, the NaCC said the first investigation relates to the alleged historic fixing of interchange rates through PAN by commercial banks.
This investigation includes PAN and all registered commercial banks comprising FNB, 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.
An interchange fee refers to the charges payable in respect of a credit/debit card transaction, whereby a payment is made by a customer of one bank to a customer of another bank.
Stating the background of the matter, the NaCC said in April 2018, they issued an advisory opinion to PAN (upon its request) regarding the collaboration by commercial banks on interchange fees.
“The commission concluded that such collaboration gives rise to potential price-fixing as envisaged in Section 23(3) of the Namibian Competition Act, and advised PAN to apply for exemption. This, PAN undertook in August 2019 for consideration by the commission,” reads the statement.
It added that PAN in its application accepted that the interchange model, adopted by its members, fixes interchange fees agreed between Namibians banks through its payment clearing house card schedule.
“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 posited.
Furthermore, the second investigation initiated is against the Bankers Association of Namibia, FNB, Bank Windhoek, Standard Bank and Nedbank for possible discriminatory conduct.
The NaCC explained that this investigation emanates from allegations that FNB, Bank Windhoek, Standard Bank and Nedbank 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.
It is also alleged that FNB, Bank Windhoek, Standard Bank and Nedbank 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. It is further alleged that FNB, Bank Windhoek, Standard Bank and Nedbank apply dissimilar conditions to equivalent transactions in the provision of fire cover to home loan clients.
Furthermore, it is alleged that FNB, Bank Windhoek, Standard Bank and Nedbank hold a dominant position in the relevant market. The alleged conduct by them amounts to a possible contravention of about 10 sections of the Act.
It is in light of this alleged conduct that the commission decided to initiate an investigation.
“The commission 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,” continued the statement.
Bank of Namibia spokesperson Kazembire Zemburuka said it was premature for the central bank to comment on the matter, and their stand is to allow the NaCC to do its job.
Efforts to get comment from some commercial banks and the Bankers Association of Namibia went futile yesterday.