THE Ubank which looks after mineworkers, was placed under curatorship by the South African Reserve Bank (Sarb) on Monday.
The move which comes into effect immediately is meant to protect the interest of depositors.
NUM secretary-general Mabapa Makgabo William said the union had been in talks with Nigerian based Access bank that was willing to put the required 800 million into Ubank.
“We were called on Sunday by the Prudential Authority and they told us they want us to get an investor who must put R800 million and I can confirm that we got an investor ….they gave us 24 hours but to our surprise before 24 hours lapse the bank is placed under curatorship.”
Reserve Bank Governor Lesetja Kganyago said: “After having duly considered the seriousness of the issues facing the bank and given that Ubank is unlikely to immediately meet its obligations as required by the Banks Act and the regulations relating to banks, the minister of finance, in consultation with the Prudential Authority, has decided to place Ubank under curatorship with immediate effect.”
Kganyago added that Ubank had inadequate capital to run its business.
“This is a capital problem … So, this bank we have worked with for a period of about two years to get shareholders to inject capital. Their shareholders couldn’t inject capital. If the shareholders could not inject capital, you find other shareholders to inject capital – this has not been done and it has come to the point where we have to step in.
The required capital adequacy ratio in South Africa is 10%, while Ubank had only 3%,” says Kganyago.
Kganyago added that the bank, with R5.23 billion in assets and about 4.7 million accounts, was liquid and will still be able to service its customers.
“I want to emphasise that Ubank will continue to operate during the period of curatorship and the curator will make decisions regarding the continued granting of loans and sound banking activities generally,” said Kganyago.
Ubank came out of Teba Cash Financial Services which started operations in 1975 and was formed to provide mineworkers with basic financial services. It got its banking licence in 2000 and is currently owned by a trust managed by trustees elected by the National Union of Mineworkers and the Minerals Council South Africa.
Kganyago said the bank plays an important role in supporting financial inclusion by serving mineworkers and their families in remote rural areas.
He said that:” This is being done to proactively mitigate the adverse consequences on Ubank’s depositors, and to preserve the stability of the South African banking and financial services sector as a whole.
KPMG has been appointed curator with Zola Beseti as a representative of the audit firm.
This means the company’s board will step aside and the curator will then work with the management of the bank to make sure that the institution is stabilised,” continued the Reserve Governor.
Asked how long it might take to resolve this, Kganyago said it depends on how deep the hole is.
“Since in this case there are investors who are interested in taking a stake in buying the bank they will now have to go and talk to the curator and the curator will make those calls and apply for the necessary approvals with the Prudential Authority,” he added.