South Africa

How can international banks operate in your jurisdiction?

International headquartered banks can either operate in South Africa as either a subsidiary (known as a representative office) or a branch. Each of these operating models is subject to the requirements of the Banks Act, 1990 (Banks Act), and the regulatory oversight of the South African Reserve Bank (SARB). A consideration of each of these operating models is set out below.

Representative office

A representative office of a foreign bank, registered in terms of the Banks Act is able to promote and assist the business of the relevant foreign bank. A representative office may not conduct the business of a bank in South Africa i.e. it may not: accept deposits or solicit or advertise for deposits. A representative office does not have any capital adequacy requirements, and is not obliged (by virtue solely of its registration under the Banks Act), to also register as a company in terms of the Companies Act, 2008 (Companies Act).


Section 18A of the Banks Act provides for the establishment of branches of foreign institutions in South Africa. The section provides that a foreign institution that conducts the business of a bank in a foreign country may conduct the business of a bank by means of a branch in South Africa. This is subject to prior written authorisation of the Registrar. A branch does have to comply with capital adequacy requirements, and is obliged (by virtue solely of its registration under the Banks Act), to also register as a company in terms of the Companies Act.

The consent of the Registrar of Banks (Registrar) is required for establishment as either a representative office or a branch. The Registrar’s consent must be sought by a written application setting out the prescribed information, including:

  • the name of the foreign institution;
  • the country in which it is established; and
  • a certificate from the competent authority from the country of origin stating that the foreign bank is authorised to conduct business in its country of origin similar to the business of a bank.

The Registrar may require further information in addition to the information set out above.

The prescribed fee payable in respect of an application to establish a:

  • representative office is R6840.00 including VAT; and
  • a branch is R 20 520 including VAT, and

is payable to the Registrar for the application.

Upon the granting of the application for consent by the Registrar for the establishment of either a representative office or branch in South Africa, the relevant entity will have to pay an annual license fee to the SARB.

What considerations does your regulator take into account when an international bank wishes to open a branch in your jurisdiction?

The Registrar must be satisfied that the foreign institution lawfully conducts business similar to the business of a bank in a country other than South Africa.

The Registrar must also be satisfied that the responsible consolidating supervisor of the foreign institution:

  • has duly authorised the proposed establishment, by the foreign institution, of a branch in South Africa;
  • accepts, is committed to and complies with the proposals, guidelines and pronouncements of the Basel Committee on Banking Supervision (Basel Committee);
  • accepts its responsibilities in terms of the aforementioned provisions as the consolidating supervisor;
  • as far as may be reasonably possible, ensures that the members of the board and the executive management of the foreign institution at all times consist of fit and proper persons;
  • is satisfied with the standard of risk management maintained by the foreign institution;
  • is committed to keeping the bank supervisory authorities in South Africa informed of any material Information regarding the financial soundness of the foreign institution and its branch; and
  • is at all times enabled to adhere to the Basel Committee’s:
    • core principles for effective banking supervision;
    • minimum standards in respect of consolidated supervision of banking groups and their cross-border establishments;
    • recommendations relating to the supervision of cross-border banking; and
    • proposals, guidelines and pronouncements.

Is resolution an important factor in your supervisor’s determination of a branch?


What are the regulatory reporting requirements placed on branches?

A branch will be required to provide the Registrar with any prescribed information requested by the Registrar at different periods during the year. The Regulations Relating to Banks set out the information to be furnished to the Registrar by a branch.

Do you allow dual licenses

The concept of dual licenses is not dealt with in our legislation. Accordingly, there is no prohibition against a branch and a subsidiary in the same group, both holding banking licenses. The Regulator will, however, have ultimate discretion with respect to the granting of licenses in such a context. Important considerations in this respect include that:

  1. a foreign bank may establish though a branch route in the first instance;
  2. the requirements for obtaining a branch licence are considerably more stringent than those for obtaining a representative office/corporate subsidiary licence. The primary difference between the two being that a branch has to meet capital adequacy requirements, whereas a subsidiary does not; and
  3. although there is no express prohibition against a foreign bank holding both a branch and subsidiary licence simultaneously, this situation would be unlikely given that a branch can do everything a subsidiary can (a subsidiary may not however perform all the activities that a branch is entitled to).

Where can I find further information?