COSATU calls for the cancellation of any identified reckless loans by Capitec Bank

The news of possible reckless loans by Capitec Bank to poor clients is deeply concerning matte. It is not the first time that Capitec Bank has been suspected of this practice of reckless lending, where loans are given to the poor and the working class without checking their ability repay the loans. In fact this practice is rife in South Africa. Reckless lending benefits the banks because it increases their earnings due to high interests that are charged on these loans up to 28%. These expensive loans put pressure on the poor, break up families and cause work related stress.  One of the reasons for the fall of the African Bank was reckless lending, lack of regulation by the banking regulator and lack of governance.

It is not surprising that Viceroy Research the same company that disclosed the fraud in Steinhoff is now alleging that Capitec may have to write down its loan book by R11 billion ($920 million) – equivalent to 14% of the bank’s assets – to “more accurately represent delinquencies and risk.

The problem at Capitec is a tip of the iceberg and an indication of lack of regulation and light regulation by government and decriminalization of white collar crime.

We call on the National Credit Regulator and other regulators to investigate and prosecute Capitec if they have violated the law and for Capitec to cancel the reckless loans and to remove those that have been listed on the credit bureau, and refund the installments on these loans.

Our affiliate Sasbo has been prevented by Capitec from organizing workers in the Capitec and thereby violating the freedom of association of workers. We call on Capitec to urgently allow Sasbo to organize workers in Capitec.

We demand that the SARB must investigate the Viceroy research report now and not wait for the collapse of Capitec as this may affect not only jobs but also retirement funds that have been invested in Capitec.  The situation of Capitec is not different from African Bank ,which relied on unsecured lending and the Viceroy report should be investigated thoroughly and not be dismissed outright.

Issued by COSATU

Sizwe Pamla (Cosatu National Spokesperson)

Tel: 011 339 4911
Fax: 011 339 5080
Cell: 060 975 6794