Johannesburg - The SA Reserve Bank decision to place African Bank under curatorship will bring stability to the country's credit market, the NCR said on Wednesday.
“The National Credit Regulator welcomes the measures announced by the South African Reserve Bank with regards to African Bank Limited which bring added stability to the South African credit market,” NCR chief executive Nomsa Motshegare said in a statement.
On Sunday, SARB 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.
The Debt Counselling Industry said on Monday the NCR should be probed for not properly investigating African Bank.
“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 at the time.
“These complaints have repeatedly been sent to the regulator who has chosen to ignore them and the plight of desperate consumers.”
However, Motshegare said the NCR conducted an investigation into the bank's lending practices and their impact on consumers last year.
“We investigated the bank last year for reckless lending and entered into a settlement agreement in terms of which the bank paid R20 million.”
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.
Motshegare said the bank's unsecured lending had declined in 2012, after the regulator “expressed concern” about it in 2011.
However, she admitted that the bank's recent growth in impairments and bad debts “went a lot further than expected”.
“Consumer over-indebtedness is not only caused by reckless lending and borrowing, but also micro and macro economic factors that have a direct impact on the debt repayment capacity of consumers, some of which occur after the granting of credit.”
Motshegare said the NCR would engage the curator of African Bank to ensure the bank's clients were served in a manner that met the terms of the National Credit Act.
The regulator would also continue to work alongside the SARB to ensure that the bank's lending practices were “sound and fair”. - Sapa