Johannesburg - The National Credit Regulator (NCR) should be probed for not properly investigating African Bank, which is now under curatorship, representative body Debt Counselling Industry (DCI) said on Monday.
“Over the past few years, debt counsellors have lodged thousands of complaints, many relating to reckless lending... against the country's major credit providers, including African Bank,” founder Deborah Solomon said in a statement.
“These complaints have repeatedly been sent to the regulator who has chosen to ignore them and the plight of desperate consumers.”
DCI called on government to launch a high level investigation into the NCR to find out why it was not doing its job properly.
The NCR was not immediately available for comment.
On Sunday, SA Reserve Bank governor Gill Marcus said African Bank had been placed under curatorship.
A consortium involving major banks had committed to underwrite a R10 billion capital raising, and would engage with shareholders and other participants.
The consortium comprises of Absa Bank Limited, Capitec Bank, FirstRand Bank Limited, Investec Bank Limited, Nedbank Limited, Standard Bank Limited, and the Public Investment Corporation.
African Bank's shares plummeted last week after it warned of massive losses and said it needed about R8.5bn in new capital.
Marcus said African Bank served 3.2 million people.
Solomon said the bank's need to raise new capital, due to unsecured loans turning bad, was not surprising following the NCR's finding of reckless lending last year against the bank.
On October 4, the bank said it had agreed to pay R20m in a reckless lending settlement reached with the NCR.
At the time, NCR secretary Lesiba Mashaba said the settlement related to allegations of reckless lending at an African Bank branch in Dundee, KwaZulu-Natal, and to an investigation launched in 2012.
On Monday, the Financial Services Board said only a small proportion of the total assets of money market funds (MMFs) were exposed to African Bank debt.
“There are 43 MMFs active in South Africa, with assets valued at R270bn, of which only 1.3 percent is exposed to ABIL,” the board said in a statement.
“The Financial Services Board has been working closely with the SA Reserve Bank in the run up to the conclusion reached by the Registrar of Banks and the decision by the minister of finance to place African Bank Limited under curatorship.” - Sapa