The South African Reserve Bank’s (SARB) Prudential Authority (PA) has placed microfinance bank, Ubank, under curatorship.
The move, SARB Governor Lesetja Kganyago said on Monday, came after the PA in recent years intensified its supervision of Ubank due to corporate governance concerns and a high number of internal control weaknesses.
During the last couple of years, the Prudential Authority has intensified its supervision of Ubank due to corporate governance concerns, a high number of internal control weaknesses, and the prolonged period it has taken to secure the injection of sufficient capital.
Addressing reporters, Kganyago said the decision was also prompted by Ubank’s prolonged period to secure the injection of sufficient capital to comply with the minimum capital requirements; diversify the bank's business model; and ensure the future sustainability of the bank.
The bank has a long history of providing basic financial services to mine workers and their families.
He 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.
“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.”
Upon an appointment of a curator, the management of Ubank vests in the curator, subject to the supervision of the PA, that any other person vested with the management of the affairs of Ubank shall be divested thereof.
The curator is also required to recover and take possession of all the assets of Ubank. Furthermore, the Prudential Authority is obliged to ensure that all payment clearing and settlement obligations of Ubank will continue to be met.
In this regard, Finance Enoch Godongwa has appointed KPMG South Africa as the curator, with Zola Beseti as the representative. The audit firm will be responsible for the bank with immediate effect, and with the full authority the law confers on the curator.
Zola Beseti is a Johannesburg-based KPMG director. He is a member of KPMG’s Policy Board.
Operations
Kganyago emphasised that Ubank would 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.
“Retail depositors represent 98% of Ubank’s total liabilities. It is important to emphasise that Ubank will continue to be open for business,” he said.
He added that Ubank remained highly liquid with a liquidity coverage ratio in excess of the regulatory requirement.
“The PA 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.
“As already indicated, Ubank remains highly liquid. Depositors will have continued access to their money and other banking services offered by the bank in the ordinary course of business. The curator will keep depositors informed of any developments at the bank,” he said.
The curatorship is a protection procedure, which gives the PA the legal means to create the necessary space to implement a resolution plan. Customers and staff are encouraged to continue supporting Ubank. – SAnews.gov.za
