Cape Town - Despite liquidity challenges it faces, the Land Bank says it will honour its financial obligations and service interest on its debts.
Board chairperson Arthur Moloto said this on Wednesday when he revealed that the cash-strapped bank was in negotiations with lenders to restructure its debt and finding ways to lengthen payment terms.
Moloto made the statement when the bank and National Treasury appeared before the virtual meeting of the standing committee on appropriations.
He also said their bank sheet showed that the bank's liabilities stood at R45 billion and that almost 45% was short term funding. He said they were in talk with a consortium of lenders on their financial position.
“We are at this stage engaging with them with a view to restructuring the debt facilities, finding ways of lengthening the term. I need to emphasise that we have every intention to honour our obligations and service the interest on those debts," Moloto added.
National Treasury acting deputy director-general for assets and liabilities Tshepiso Moahloli said the bank had not been on the radar of SOEs in distress.
Moahloli also said when the bank had liquidity challenges in 2019 it applied to have guarantees of back debts. But the downgrading early this year sparked liquidity challenges that required National Treasury support.
She said the bank initially asked for R5bn and thereafter R17bn against declining revenue and the budget that was not balancing.
"When you get a request you don't sign a cheque. You want to understand the challenges," Moahloli said.
Moahloli said the National Treasury would await the work of the corporate finance advisor.