COSATU statement on the reckless lending allegations levelled against Capitec Bank
The Congress of South African Trade Unions has noted with concern the allegations of reckless lending against Capitec Bank. These disquieting allegations should be immediately investigated and clarified.
COSATU is wary that if these allegations are proven to be true, they will have a disastrous impact on the poor workers and the millions of low income workers who bank with Capitec and owe loans to them. We have noted the reassurances coming from both Capitec Bank and the Reserve Bank that Capitec is solvent but we are worried by the previous systemic failures that have resulted in the African Bank and Steinhoff situations.
The federation also demands the other four banks to also proactively indicate what steps they will take to protect themselves from this potential crisis. We are worried because problem banks can infect other banks and this contagion to other banks and the rest of the economy can be very serious. Workers demand to be assured that the allegations leveled against Capitec Bank will not result in systemic risk that will have a ripple effect across the economy.
South African workers are already highly indebted and they are victims of reckless credit providers. The levels of reckless lending in the country have left many low income earners saddled with loans they cannot afford.
Credit providers prey on the poorly paid and desperate workers and impose unreasonable interests on their loans, and sometimes they hide some of their fees and extra charges behind unclear calculations. Most of these workers end up being unfairly listed with the credit bureaus.
COSATU also remain opposed to the phenomenon of bailing out reckless financial institutions by the Reserve Bank, while leaving the workers saddled with massive debts. Bailing out reckless investors and owners using public funds is unfair and contributes to moral hazard.
Issued by COSATU
Sizwe Pamla (Cosatu National Spokesperson)
Tel: 011 339 4911
Fax: 011 339 5080
Cell: 060 975 6794