HOW much of a problem is it for Absa that its parent, Barclays, has now been caught up in the London interbank offered rate (Libor) scandal, which may turn out to be a long, drawn-out affair ? The scandal has claimed the scalp of chairman Marcus Agius, but he may be only the first. The issue is particularly pertinent for Absa, SA's biggest bank by customers, since it has its own problems, announcing only last week that earnings would be lower than expected.

The effect on Absa partly depends on the nature and extent of the Libor scandal. What happened was that traders in Barclays' investment banking arm, Barclays Capital, deliberately misreported the Libor - the rate at which banks offer credit to each other - in order to make trading profits. Barclays has now paid an extraordinary $452m fine for this subterfuge. But perversely, the good news for Barclays is that the scandal looks set to spread to other banks. Even the Bank of England appears to have unwittingly condoned this behaviour during the 2008 banking crisis.

This is all fascinating, but what does it mean for Absa? It is, in short, bad news not only for Absa but perhaps also for the whole notion of foreign investment in banking. One of the ideas behind the Absa takeover was that this sophisticated British bank would help Absa modernise and expand both within SA and the rest of Africa.

Yet, the benefits don't seem to have flowed through, and Absa's position in South African banking has remained static. It appears that rather than being taught the ropes by its European parent, the cash-hungry parent is now relying on its young for cash. Absa's dividend yields are noticeably higher than those of its peers despite its financial position being somewhat weaker. This is almost exactly the opposite of what was supposed to happen.

At the root of the issue is a clash of cultures within banking. As Financial Times columnist Martin Wolf commented yesterday, if banking is to retain public trust, there must be a separation of the self-interested trading culture of today's investment banking from the service-oriented culture of oldfashioned commercial banking.

What we know as "banking" is, in fact, two different things with two different business models. Each of those business models have a different ethos. These cultures may be incompatible. The South African banking market is partly protected from this difference because the investment banking divisions of international banks constitute a large part of the local investment banking market.

Yet, Absa is the one bank that is not protected because parent Barclays is as much a trading bank as a deposit-taking bank. The South African banking regulator needs to examine or re-examine this risk and suggest some solutions.