Johannesburg - The Gupta family are aggressively wooing the shareholders of UBank in a desperate bid to buy the financial institution to ease their banking woes.
This comes two years after the Guptas’ first attempt to buy UBank failed and months after all of South Africa’s major banks stopped doing business with the controversial family and its companies.
The bosses of Gupta-controlled Oakbay Investments have been calling and meeting leaders of the National Union of Mineworkers for weeks, trying to convince the union to sell.
NUM controls a 50 percent stake in UBank. The rest is held by the Chamber of Mines.
Nazeem Howa of Oakbay expressed the company’s interest in the bank to individual unionists after the union rejected their offer in 2014, more than a year before their accounts were closed by the top four banks.
This suggests the company’s bosses may have expected its subsequent troubles with the leading financial institutions.
Speculation is also rife in political and financial circles that the banks’ moves were related to fears over regulatory breaches of the laws governing the movement of money in and out of the country.
NUM general secretary David Sipunzi confirmed to the Daily News sister newspaper, The Star, that Howa had contacted him on his cellphone.
“We have been approached unofficially about selling UBank to Oakbay. Nazeem called me and I told him what our stance is and the official channels he should follow,” Sipunzi said.
Oakbay’s decision to resuscitate its mission to acquire UBank in light of its current woes has the potential to send NUM into turmoil.
The divided union’s leaders appeared to be at odds over the sale of the bank, despite a standing resolution in its central committee meeting this month to hold on to the bank.
The bank is under financial strain, with the Reserve Bank demanding that its shareholders come up with a recapitalisation plan that will see them channelling at least R152m into UBank by next year. UBank has a balance sheet of R4.3 billion and has been suffering major losses since the mining industry's distress began in 2012.
Controversially, Oakbay made a R1m “donation” to NUM to cover costs for its central committee meeting earlier this month.
The Star has learnt this was the first time the company has made a financial contribution to the union, raising suspicion among NUM members and others in the labour movement that this was meant as a sweetener for the bank sale. This suspicion is reinforced by the timing of Howa’s aggressive lobbying.
Sipunzi said the organisation had no intention to bow to pressure.
“Our stance is that UBank is not for sale. We’ll take all the necessary means to finance the recapitalisation; selling would be the last resort.”
However, unionists who got wind of the developments feared the worst, saying that given NUM’s instability, the Guptas might just get their way.
In a strongly worded statement after its national executive committee meeting in February, the union appeared to be suspicious about moves to sell the bank, which has miners and their families as the main beneficiaries.
“It is imperative the two stakeholders meet and resolve the issue of the (management) trust, which seems to be representing its own interest," it said. “We also call upon the government to intervene and save the only black-owned bank in the country from falling into the hands of vultures.”
Finance Minister Pravin Gordhan would have to approve the transaction if the company aims to get more than a 25 percent stake.
Treasury spokeswoman Phumza Macanda cited section 54(1) of the Banks Act, which states that “the minister must consent, in writing and conveyed through the registrar, to an arrangement for the transfer of more than 25 percent of the assets or liabilities of a bank to another person”.
It is, however, unclear if Oakbay would meet the Reserve Bank’s requirements for it to own a bank if it has been rejected by existing banks.
The Reserve Bank this week refused to divulge details of any specific transactions but said the registrar of banks had a right to conduct a “fit and proper person” test on entities seeking to acquire a bank.
“The criteria for such a test include, but are not limited to, fiduciary oversight capacity as well as the background of the acquiring entity in terms of governance, integrity and soundness,” said Reserve Bank spokesman Jabulani Sikhakhane.
Top members of the Gupta family, among them Ajay and Atul Gupta, and President Jacob Zuma’s son Duduzane Zuma resigned as directors of Oakbay following the banks’ decision to cut ties after allegations surfaced about how they were wielding undue influence over Zuma, some members of his cabinet and executive, and board members of state-owned enterprises.
Howa declined to answer directly when contacted by The Star.
He asked for questions to be emailed to Oakbay’s PR company. These had not be answered at the time of publication.
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Factfile
* UBank was established in 1975 as Teba Cash Financial Services.
* It served mainly as a savings vehicle, operating under an exemption in the Banks Act.
* The majority of its clients are miners.
* It became a fully fledged, licensed retail bank in 2000.
* UBank ownership is in the form of a trust (Teba Trust).
* Teba Trust is administered by NUM and the South African Chamber of Mines.
* Trust beneficiaries are the bank’s customers.
* In 2007, the bank was restructured to target a wider market of clients.