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KPMG SA roped in to clean up Ubank’s balance sheet as bank is placed in curatorship

The South African Reserve Bank yesterday placed Ubank under curatorship with immediate effect while the finance minister appointed KPMG as the curator. Picture: Philippa Larkin.

The South African Reserve Bank yesterday placed Ubank under curatorship with immediate effect while the finance minister appointed KPMG as the curator. Picture: Philippa Larkin.

Published May 17, 2022

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Audit firm KPMG South Africa has been roped in to clean up the struggling Ubank’s balance sheet as the bank’s capital resources are on the brink of drying up.

The South African Reserve Bank (SARB) yesterday placed Ubank under curatorship with immediate effect while the finance minister appointed KPMG as the curator.

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Ubank Group Limited is owned by Teba Fund Trust and administered by the National Union of Mineworkers (NUM) to service the unserved and underserved market.

It operates in the microfinance sector which mainly targets lower-income blue-collar workers in the mining industry, with more than 4.7 million active accounts.

Governor of the Reserve Bank Lesetja Kganyago said Ubank has had significant challenges over the years.

He said the Sarb’s 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,” he said.

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Kganyago has, however, assured depositors that there was enough liquidity at Ubank to meet its obligations as it has over R5 billion in assets.

He emphasised that Ubank would 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.

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“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.

Kganyago said the curatorship was a protection procedure, which gave the Prudential Authority the legal means to create the necessary space to implement a resolution plan.

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“The role of the Prudential Authority is to make every effort to ensure that South Africa’s banks have adequate capital, liquidity and leverage ratios,” he said.

“Notwithstanding the challenges facing Ubank, it plays an important role in supporting financial inclusion by serving mine workers and their families in remote rural areas.

“The Prudential Authority therefore remains committed to supporting financial inclusion by fulfilling its mandate of protecting the hard-earned funds of members of the public saved in the banks, and by continuing to maintain the strength of the banking and financial system.”

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