Some banking history

FNB banking history exhibitionThis year, to celebrate 180 years of banking, FNB has created an exhibition which is currently at Portside in Cape Town. In addition to documenting the history of FNB, it is a fascinating history lesson on the evolution of banking in South Africa.

FNB started its life in Grahamstown in 1838 as the Eastern Province Bank. It was started by wool merchants, and the first deposits were not money, but items such as flamingo feathers and wool. These items were then exchanged for a bank-issued note that could be used as legal tender. The goods were then transported to Port Elizabeth where they were shipped to England to be traded. Bartering remained a common form of trade in the early days. As diamonds and gold were discovered, banks turned into security vaults to house these precious commodities.

At this stage banks were issuing their own notes as there was no local currency. All money supply of the British pound was controlled out of England. One could draw parallels to the cryptocurrency market today: in the early 1900s you had to consider which bank notes were worth having, as their value depended on the survival of those individual banks that issued them. If a bank collapsed, their notes would be worthless.

Then after World War I, the South African Reserve Bank was founded in 1921, making it the oldest central bank in Africa. The first bank notes were issued by the Reserve Bank on 19 April 1922 – 97 years ago.

In terms of FNB’s own history, the National Bank of South Africa was then formed in the 1900s as part of a merger with Bank of Africa and several other banks. In 1926, the bank suffered heavy losses and was rescued by Barclays. The bank operated as Barclays until 1987 when it disinvested from South Africa in protest against apartheid. The new First National Bank brand was born, with Southern Life and Anglo American as its major shareholders.

Furore over branding

I still remember as a teenager the furore over the branding of FNB, with its acacia tree that many believed contained a rabbit and machine gun – supposedly a sign that this was the “ANC” bank. This politicisation was no doubt largely due to the then Managing Director Chris Ball who was seen as an ANC sympathiser.  In 1985 he appeared on a BBC radio programme with African National Congress representatives and was part of a delegation which met the ANC in Lusaka.

Seen as a ‘radical’, he drew the attention of PW Botha’s government and a parliamentary enquiry was held into Ball’s “anti-apartheid activities” which included loans that had been granted by the bank to pro-ANC funders whose adverts called for the unbanning of the ANC and even an advert to celebrate the ANC’s 75th birthday. Ball resigned and left the country in 1989.

History reminds us that banking and politics have always been intertwined.

This article first appeared in City Press.

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