The National Union of Mineworkers (NUM) has expressed shock and surprise by the South African Reserve Bank’s (SARB) decision to place Ubank under curatorship.
The SARB yesterday placed the Ubank under curatorship with immediate effect following “significant challenges over the years” while the finance minister appointed KPMG as the curator.
Ubank Group Limited is owned by Teba Fund Trust and administered by the NUM.
It operates in the micro-finance sector, which mainly targets lower-income blue-collar workers in the mining industry, with more than 4.7 million active accounts.
SARB governor Lesetja Kganyago said the Prudential Authority had been monitoring corporate governance concerns at Ubank and a high number of internal control weaknesses.
He raised serious concerns about the prolonged period it has taken for Ubank to secure the injection of sufficient capital to comply with the minimum capital requirements.
“Ubank has had significant challenges over the years, and its capital adequacy has gone down to around 3 percent, far below the average 20 percent,” Kganyago said.
However, Kganyago assured depositors that there was enough liquidity at Ubank to meet its obligations as it has over R5 billion in assets.
NUM general secretary William Mabapa said the curatorship happened despite the Ubank’s board commitment on Sunday that it will raise the required R800 million to save the bank from being placed under curatorship.
Mabapa said the Ubank board managed to raise the required money, and the NUM is shocked by this latest development.
“We were called last night by the Prudential Authority (PA) advising that we should raise R800 million. Of course, that money was successfully raised within 24 hours,” Mabapa said.
“We are wondering why the PA decided to advise the Reserve Bank to take such a drastic decision.”
Kganyago said the curatorship was a protection procedure which gives the Prudential Authority the legal means to create the necessary space to implement a resolution plan.
He emphasised that Ubank will continue to be open for business, with depositors continuing to have access to their money and other banking services.
“Ubank remains highly liquid with a liquidity coverage ratio in excess of the regulatory requirement,” Kganyago said.
“The Prudential Authority is aware of interested parties that have been discussing and are continuing to discuss investing in Ubank and which investments if concluded, will resolve the issues at Ubank. The curator will take this process forward.”
KPMG will be responsible for Ubank with immediate effect and, with the full authority the law confers on the curator, with KPMG director Zola Beseti as representative.
BUSINESS REPORT ONLINE