How Stable Are SA Banks?
With the recent scandal at VBS Mutual Bank consumers have once again been reminded that banks can fail and collapse overnight.
Recent history in SA banking has taught consumers that banks are not as stable as they appear and that things can be deceiving. Good advertising and expensive offices do not make a bank secure. In the past, consumers have seen among others; Saambou, African Bank and very recently VBS Mutual Bank fold overnight.
‘banks can fail and collapse overnight’
In the case of VBS, the cause was the looting of billions of Rand by employees of the bank. African Bank fell when the real profit/loss figures came to light in the wake of reckless lending accusations and the jumping ship of upper management (who cashed out and made a run for it before the bank collapsed). [Read More About That Here]
Credit Rating agency Moodys regularly report on how ‘stable’ banks are. They recently had a look at SA banks (the top 7 local commercial banks).
Though the local banks are still rated as below investment grade, Moodys have now upgraded their outlook (where they see things going) from negative to stable. This is seen as a positive indicator that experts feel that these banks are not going to collapse. Recent SA legislation has been designed to help protect both consumers and banks themselves by preventing the banks from giving credit to consumers who cannot afford to repay that credit. This includes making the banks check on consumers income, other debts and monthly expenses.
Other processes have also been put in place to help the banks recover funds from financially strained consumers such as debt review. A new process that may become available to the unemployed who have debt is called debt intervention. This process also allows consumers to pay very little on debts each month or possibly even allows debts to be written off if they remain unemployed for many years.
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Portfolio Committee Adopt Credit Act Amendments Bill The much debated “debt intervention” bill has been formally adopted by the Portfolio Committee on Trade & Industry. This means they are finally happy with the wording of the Bill (though many debate … read more
NCA Amendments Soon to Take Next Step? For the past 3 years, the Portfolio Committee on Trade & Industry has been working on a way to assist the poor of the country to deal with their growing debt. This is … read more
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Portfolio Committee Hearings at Parliament About NCA Amendments The Portfolio Committee on Trade & Industry is trying to get amendments to the National Credit Act (NCA) passed in an effort to bring into existence something called Debt Intervention. This plan … read more
Standard Bank’s Presentation on the Draft NCA Amendment Bill Standard Bank joined a number of other interested parties in making a public presentation about the Portfolio Committee on Trade & Industry’s proposed changes to the National Credit Act, this month. … read more
NDCA’s Presentation on the Draft NCA Amendment Bill The Portfolio Committee on Trade & Industry has been hearing public comments and presentations on their draft amendments to the National Credit Act. An association of the large Debt Counselling firms in South … read more
MFSA’s Presentation on the Draft NCA Amendment Bill This week the Micro Finance Association of South Africa got to make a presentation in regards to concerns they have over the Portfolio Committee on Trade & Industry’s proposed amendments to the National Credit … read more