Midway through his budget speech, finance minister Trevor Manuel paused for effect: "SA's banks are sound," he said, adding that this was not a claim "they would hazard making in [many] other countries".
As his speech came after a year in which the global economic landscape has been bent out of shape thanks to bad decisions made by banks in New York and London, it wasn't surprising that Manuel devoted large tracts of his speech to the strength of local banks.
But what will have surprised some pundits is that Manuel steered away entirely from providing any clues about what form "new regulation" will take to govern the banking industry.
In a speech to parliament in December, Manuel said he would convene a meeting of SA's financial regulators to ensure "we give effect to the common principles for reform".
In his budget, Manuel said that though SA banks "were not significantly exposed to subprime" investments, there was a need to "sharpen our regulatory oversight, and work with banks to identify any potential problems early".
The budget review - the detailed exposition of which the minister's speech is essentially a brief summary - was little better, saying only that "further emphasis will be placed on higher standards for appropriate market conduct, alongside prudential regulation in the banking sector".
Kokkie Kooyman, global fund manager at Sanlam Investment Management, said the lack of details in the budget around banking regulation reflects the uncertainty over how to go about it. "The prevailing mood is that we shouldn't make it too difficult for banks to lend, and, in SA, banks have been proven to be healthy and are lending, so why damage one of our strong points?"
Kooyman said while there are likely to be discussions about tighter regulation, "I can't see any new regulations coming out in the next two to six months."
But there was a censure of another kind for SA's banks. Manuel said banks aren't providing credit as they did before the crisis, and credit extension had slowed, "probably more rapidly than is desirable. We expect our banks to continue to extend credit to worthy customers." He said it was the rapid withdrawal of credit that had plunged much of the developed world into crisis.
The banks have drastically slashed lending for home loans. Two years ago they would lend up to 108% of the value of a house. Now, Standard Bank and Nedbank will only lend 90% of the value, if the house costs less than R2,5m. FNB will only lend 80% for houses worth more than R1m, and Absa will lend a maximum of 85% for a house worth up to R2,7m.
When asked about this in January, Nedbank CEO Tom Boardman said it would be "irresponsible" for banks to lend 100% of the value "when we have no idea if house prices will stay flat or fall".
Bankers watching Manuel's broadcast will have noted the rebuke.
But if there was nothing in the budget to frighten banks, there was also nothing to scare any other JSE-listed companies.
Russell Loubser, the CEO of the JSE, said the budget was a "pleasant surprise. Obviously [Manuel] has more information than we do, because I thought he had less room to manoeuvre. You can tell the difference between a desperation budget and a solid budget, and this was solid."
Loubser said Manuel's "green" proposals, that will effectively give companies tax breaks for trading carbon credits, were particularly welcome. SA is one of the 20 largest greenhouse gas emitters in the world and responsible for 42% of Africa's emissions.
It works like this: if one company is in a position to demonstrate a new process to reduce carbon dioxide, they get carbon credits which they can sell to someone else who isn't in a position to reduce carbon emissions. This creates a "carbon market". But Loubser warns that "unless it is going to be enforced, it's of no use to anyone".
In his speech, Manuel said: "It is proposed that income derived from the disposal of [carbon credits] be tax-exempt or subject to capital gains tax instead of normal income tax."
By offering tax breaks for companies that use carbon credits, Manuel's efforts could jump-start this market in SA.
Peter Brooke, Old Mutual head of macro strategy investment, said that unlike previous budgets, there was no curve ball that would affect markets.
For example, in 2006, the prospect of windfall taxes raised in Manuel's budget spooked investors in Sasol, and the petrochemical company shed 8,3% on the day. This time, said Brooke, "I didn't see anything funny." And he noted that pushing out the royalty taxes on mining was helpful.
WHAT IT MEANS
 No clue to new banking rules
Recovering Land Bank gets more cash
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Kooyman says construction companies were boosted by the news on infrastructure spending, while the firms that sell products to poorer consumers also probably benefited. "The speech will have benefited the likes of Shoprite or African Bank [which provides unsecured loans to low-income customers], rather than a bank like Investec," he says.
One bank that did get a dishonourable mention in the budget for asking for taxpayer cash was the state-owned Land Bank. Last year, after years of mismanagement and allegations of corruption, the Land Bank was taken away from the jurisdiction of the department of land affairs and placed under the control of the treasury.
The budget review says government will have to inject additional capital into the Land Bank to allow it to finance land reform and emerging farmers. Until recently, it was a shambles: money it had lent wasn't being repaid, it wasn't fulfilling its mandate of lending for development (only 4% of loans had gone to development projects) and it lacked proper controls.
