Competition Commission investigates commercial banks
The Namibian Competition Commission this week launched investigations against local commercial banks and the Bankers Association of Namibia for fixing of interchange rates, possible discriminatory conduct in the provision insurance for home loans, unfair pricing of certain ancillary services and discrimination in the provision of home loans to clients belonging to other banks.
Of the two investigations taken up on 10 March, the first relates 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; 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.
The Commission in April 2018, issued an advisory opinion to PAN (upon its request) regarding the collaboration by commercial banks on the interchange fees, where it concluded that such collaboration gives rise to potential price-fixing and advised PAN to apply for exemption in terms of Namibian Competition Act.
PAN undertook this 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 Namibian 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 the Act.
“To that effect, the Commission resolved to initiate an investigation into the alleged historical conduct in the relevant market,” the Commission said.
The second investigation involves 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.
According to the Commission, it is also alleged that the 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. 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 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.