A government minister’s warning that the banking system may be facing a crisis similar to the sub-prime lending bubble that burst in the US has received short shrift from the financial services sector, but the government continued its slanging match at the weekend against one of the largest banking groups, Nedbank.

SACP general secretary Blade Nzimande made the extraordinary claim that the banks were sitting on a time bomb in an online newsletter, in which he vented his anger at Nedbank non-executive chairman Reuel Khoza who has been critical of government leaders.

ANC secretary-general Gwede Mantashe took it further on Friday by warning that Nedbank might simply be punished by the government where it did business with the bank.

Banking Association of South Africa managing director Cas Coovadia reacted sternly to Nzimande’s remarks. He told Business Report: “I don’t think it is appropriate for any minister… even the minister of finance to make a statement like this without any data.”

There was “absolutely no sign of a bubble”, said Coovadia, who noted that the financial sector was sensitive and it was “extremely dangerous” to speculate in the manner that Nzimande had done.

He noted that the banks were strongly placed, “capital is good, liquidity is good and they are managing default”. But he said Nzimande’s remarks about unsecured credit was being investigated – with the assistance of the banks – by the National Credit Regulator and the registrar of banks.

Comments on this matter should only be made once the research was completed. At the moment Nzimande’s statement had “no credence”, but it was worrying that he had attacked the financial sector, which was ranked number two in the world, “for its stability”. This stability made a significant contribution to South Africa’s position in the World Competitiveness Report.

Economists.co.za director Mike Schussler said Nzimande should be fired for speaking outside of his portfolio. “It is very irresponsible for any government minister to tell the world that the banking sector is in a crisis. Many banks rely on wholesale funding some of which comes from overseas.”

But the governing party was of the view that it was the business community that should be punished. The New Age, a government supporting newspaper, reported Mantashe as saying that “insulting the political leadership in annual reports is taking things too far”, and reported that the ANC would be discussing whether it “makes sense” to bank with the Nedbank Group.

The newspaper reported Mantashe as saying: “When business develops unpatriotic tendencies through their reckless pronouncements, their sentiments are used by potential investors to measure the wisdom of investing in their country.”

Khoza, who declined to comment on Friday, other than to indicate that matters would be clear “in the fullness of time”, had questioned the moral quotient of the nation’s current leadership crop in the Nedbank annual report released three weeks ago.

Since then he has been subjected to a stream of vitriolic responses from Mantashe, Police Minister Nathi Mthethwa, ANC spokesman Keith Khoza and now Nzimande.

Nzimande, who is also the higher education minister, used Umsebenzi online, the SACP newsletter, to attack the Nedbank chairman.

He said Khoza was angry because Nedbank had failed to find a foreign buyer, was worried about its unsecured loan debt book and was trying to deflect attention away from the bank’s own troubles.

Mthethwa released a statement saying: “Dr Khoza should not hide in the comfort of cushy Nedbank offices while licking fingers of fat cheques (and) make baseless statements without producing any evidence to the contrary (sic).”

The instruction has now gone out at Nedbank not to comment on the public debate.

Bank economist Isaac Matshego said the bank would normally comment on such matters as possible credit bubbles but because it was related to what Khoza had written, it was not appropriate to comment. Khoza himself referred all matters to the Banking Association of South Africa.

Suggesting that the banking industry in general was facing “the eye of a brewing storm”, Nzimande said since the onset of the current global capitalist crisis, the banking industry had been sinking “deeper into its own financial problems”, characterised by unsecured credit transactions, which had grown between September 2010 and September 2011 from R920 million to R1.3 billion.

Nzimande suggested these figures explained why Khoza was so angry. That was why Khoza could not sell Nedbank to a foreign investor. No foreign bank was likely to venture into buying in instances “of such huge debt exposure”.

Nzimande also suggested that Khoza was angry because, since President Jacob Zuma had shifted policy away from “neo-liberal policies toward an active industrial policy, premised on intended increased investment into boosting manufacturing and investment into infrastructure”, the financial sector had gone apoplectic.

“This is, of course, no good news to a financial sector that has accumulated massive profits through the financing of debt-for-consumption and financial speculation than investing in the productive economy.”

Standard Bank chief economist Goolam Ballim did not venture a comment on the political debate, but said there had been a shift from using mortgage financing “as a modern day overdraft facility” to unsecured loans, “and as with all types of lending there is certainly going to be an element of non-performing loan expectations”.

Fortunately, he said, South Africa’s banking system was “robustly capitalised” and traditionally had a strong asset-backed lending system. Unsecured loans were a fraction of overall lending. “This does not suggest systemic concern.”

Schussler, however, said Nzimande’s ill-considered remarks were proof of the existence of Khoza’s label that a “strange breed of leaders” had emerged in South Africa.