Ubank must raise R1bn to manage its financial troubles

UBANK, the only black-owned bank that focuses on servicing mine workers, is in a financial crisis and needs to raise R1 billion to keep afloat.

Ubank spokeswoman Mpho Ramosili denied the bank was for sale but said over the last two years the bank had set about a recapitalisation programme to address capital problems as a result of regulatory requirements of the bank and to fund its growth.

Ramosili said the capital raising was normal in the banking sector, and was not in breach of regulatory capital requirements.

“It is important to note that we are currently not in breach of any regulatory capital requirement. Capital raising is normal in the banking sector. It would not be correct to speculate on the nature of capital to be raised,” she said.

“What we can confirm is that in the last 15 months we indicated that we need about R1 billion over a period to finance our growth plan as well as deal with our capital requirements. Having said, it is important to note that we are currently not in breach of any capital regulatory limits.”

David Sipunzi, the secretarygeneral of the National Union of Mineworkers (NUM), this week raised fears that the bank risked being sold if it did not raise the money or have its licence withdrawn. He called on the government to intervene and save the bank.

“Those who want to sell the bank want to sell it for a mere R300 million. It is against this background that the NUM cannot agree to any notion of trying to sell that bank,

NUM cannot agree to any notion of trying to sell that bank, especially to dark forces …

especially to dark forces whose intention is to take our members to the cleaners,” Sipunzi said. “We are dutybound to protect the savings of our members.”

Ubank, which was formerly Teba Bank, is administered jointly by a board of trustees consisting of the NUM and the Chamber of Mines.

Nikisi Lesufi, the senior executive for health and environment at the Chamber of Mines, this week said it was the fiduciary duty of the chamber nominees on the Teba Fund Trust to ensure that Ubank was compliant with all Reserve Bank requirements and to ensure that the objectives of the trust were supported.

“The sustainability of Ubank is a key concern for the Chamber of Mines. The chamber nominees have therefore been fully mandated to carry out their duties to ensure that the bank is sustainable and complies with the necessary requirements,” Lesufi.

Ubank fell into trouble after the National Credit Regulator last year referred it to a Consumer Tribunal, recommending it should be fined for reckless lending and forced to change its business practices. A hearing was held in October where both parties agreed to meet again by mid-year. The regulator had said at the time that among other contraventions, Ubank granted credit to customers who were already behind on other debt repayments and had also failed to disclose interest rates on credit agreements.

Ubank had been hit by the five-month platinum strike in early 2014, which had an adverse impact on profitability mainly due to the increased impairments and lower-income generating activities.

The bank posted a loss before taxation of R29m in the year to February.