Termination of the bank-customer relationship : Lessons from Minister of Finance v Oakbay Investments

Abstract

By April 2016, most, if not all of South Africa’s banking institutions had shut its doors to Oakbay Investments, together with thirteen other companies,1 all with close ties to the now notorious and politically linked Gupta family group of companies. The account closures incited a legal and political “war”, which included court intervention by the erstwhile Minister of Finance Pravin Gordhan, asking for declaratory relief, stating that the Government, least of all the Minister of Finance, could not interfere with the decision of the country's major banks, in so far as they no longer wanted to do business with the Guptas.2 Underpinning the “Bank versus Gupta war”, is the bank-client or bank-customer relationship. In this dissertation, I will explore the legal foundations of this relationship, and whether the bank can terminate this relationship unilaterally. What are the considerations of the bank, and ultimately what are the consequences for undesirable customers in the banking marketplace?