UBANK might soon be back on track, but only if black businesses put into action their support for Sekunjalo Investment Holdings (SIH) chairperson Dr Iqbal Survé’s offer of R250 million, to rescue the bank from financial troubles that landed it in curatorship.
Members of the Black Business Council (BBC), who have for years been battling with ideas of forming a black-owned bank, welcomed Survé’s proposal and offer of support but they are yet to meet and discuss it.
Addressing the BBC Summit 2022 prior to departing for the World Economic Forum (WEF) meeting in Davos, Switzerland, Survé pledged to BBC members and guests, that Sekunjalo would offer R250 million towards rescuing the black workers’ bank from collapsing. He said his company and its subsidiaries were also prepared to move their combined revenue of just under R10 billion and assets to Ubank.
All black businesses and professionals need to do is raise R500 million for Ubank, of which half of the money might come from Sekunjalo.
The bank is currently under business rescue following the SA Reserve Bank (SARB)’s decision to place it under the curatorship of KPMG. This was after the Prudential Authority (PA) had concluded that the bank had run out of capital, a situation that had placed its client’s investments at risk. The bank will, however, continue to provide services to its existing clients.
Talking to Independent Media, BBC vice president Yvonne Maitin, who is the chief executive of One Africa Capital Partners, with 20 years of experience in financial services management including investment banking, said black businesses need a bank that would look after their interests, because any attempt to transform current traditional banks, has been a futile exercise despite having black people in top positions.
The appointment of Arrie Rautenbach as ABSA chief executive had been seen by many as a major setback in transforming the bank.
Maitin said after Survé’s live announcement, a number of BBC members approached her with keen interest. “They approached me just to find out more information and indicated that they were very interested in exploring this opportunity.”
However, Maitin said it was still early days to conclude whether or not Survé’s offer will receive practical support, as due diligence would still need to be done including consulting BBC members.
The duration of the Ubank’s stay under curatorship will be determined by KPMG, which is currently conducting assessments and analyses of the bank’s financial condition. Currently, the bank is unable to timely raise the additional shareholder funding capital needed to restore its regulatory capital adequacy requirements.
“Ubank is also not in a position to provide a satisfactory action plan and strategy that can be implemented and executed in a short period of time to address the capital adequacy requirements. The only option available is through the sale of the shares of Ubank to a potential investor that will recapitalise the bank,” said SARB spokesperson Ziyanda Mtshali.
NUM and Minerals Council of South Africa, previously known as the Chamber of Mines, are shareholders of the bank that is owned by Teba Fund Trust.
BBC would seek a clear understanding of Survé’s announcement as Maitin was not sure where a further R250 million, in addition to Survé’s offer, would come from. The BBC was still trying to understand what exactly led to the placing of Ubank under curatorship and how much is required to rescue the bank.
“That would determine exactly how people or members have, or are willing (to contribute), as when you do public fundraising you have to know if the value proposition and the investment proposition are viable then you generally would not struggle too much.
“If you have proper investment appraisal and you have a viable investment proposition then people will be willing to allocate towards any investment proposal,” said Maitin.
Maitin said since contributions would be difficult to obtain from private pockets, there should be a need to galvanise businesses to come on board, including borrowing institutional capital. As an apex body, BBC had a diverse membership, which includes professional associations such as the Black Management Forum (BMF) and Association of Black Securities and Investment Professionals (ABSIP), businesses that are corporate members and small businesses.
“BMF and ABSIP have several members, so there is an opportunity to touch a wide number of black businesses and black professionals through the apex body just because it reaches quite a wide number,” she said.
Maitin said black people were in dire need of their own bank, as there is such a massive demand and BBC members believe that there is some form of a monopoly of the banking sector perpetuated by the major banks.
“Research has been done which shows that the manner in which black people, including the retail side and how risk is measured, is different. Home loans (applications) for lots of black people are being rejected because the risk rating and methodology and process are not exactly the same,” she said.
Sekunjalo and its subsidiary companies are currently in the Equality Court and Competition Tribunal fighting off a decision by banks to shut down their banking facilities, a decision they have based on unproven reputational risk.
Making the pledge, Survé called on black businesses and black professionals to get together to save Ubank by putting together the required capital for the bank to come out of the woods. According to SARB governor Lesetja Kganyago, Ubank has liquidity assets of R5 billion.
“So I would like to leave you with this particular opportunity and challenge, and I want to commit from Sekunjalo’s side [that] we are prepared to work with you as entrepreneurs, as business proprietors and professionals to recapitalise Ubank. I am saying up front that we are prepared to commit immediately, obviously with required conditions, the R250 million towards the capitalisation of Ubank,” said Survé.
Survé also said Sekunjalo does not want to take control of Ubank, but it wants to work together with “our” black partners and entities to make sure that another black bank succeeds. Together, we can make Ubank a successful bank. We are prepared to take to Ubank our revenue of about just under R10 billion of all of our companies. We are prepared to take our assets across to Ubank.”
According to the National Union of Mineworkers (NUM), which is a major shareholder in Ubank, the bank suffered a financial loss mostly because of the 2012 Marikana strike that led to the death of 34 mineworkers.
The mineworkers were subjected to a five-month loss of income due to a no-work and no-pay policy that was implemented during that strike and this resulted in them failing to service their loans. However, NUM’s counterpart, the Association of Mineworkers and Construction Union (Amcu), suspects that the bank has fallen victim to monopoly capital.
According to NUM deputy general secretary, Mpho Phakedi, the bank was the victim of many events that engulfed the mining sector over the years, which caused it to be unable to collect money that had been loaned to mineworkers.
“Not necessarily just those that had been retrenched, the 2012 strike in Marikana affected workers [and] some of those workers could not pay because they were from the five-month strike.
“Out of every 10 workers that were retrenched at least six of them were clients of Ubank. So as a result of that, the bank had to sit down and write off the loans,” he said.
Amcu president Joseph Mathunjwa said the bank was the victim of a white monopoly, including the financial sector, which he said had influenced the SARB against financing the bank. “We are concerned about the power of these multinational companies over South Africa as they are destroying the social wage, they destroy everything that benefits the poor of the poorest.”
Ubank and TEBA have not yet responded.