SA banks ‘underwhelm’ with response to virus fallout

Labour unions and small business owners call for ‘big bang intervention’.
Nedbank has urged customers to proactively contact them should they run into financial difficulties in the next few months. Image: Moneyweb

South African banks are being criticized by labor unions and small business owners for not doing enough to help struggling customers as the coronavirus lockdown looms.

“The response is quite underwhelming,” said Matthew Parks, a parliamentary coordinator for the Congress of South African Trade Unions. “There are too many ifs and buts. It’s hitting too few people. It’s just more bureaucracy.”

Cosatu wants a “big bang intervention” that will result in across-the-board loan deferments, said Parks. He leads the delegation of the nation’s largest labor federation at the National Economic Development and Labor Council, a forum for the government, business and community members to discuss challenges facing the country.

The lenders weren’t allowed to hammer out a coordinated response until this week, when they received approval from antitrust authorities to work together. Customers who are up to date with debt payments have been encouraged to call their banks for help if they’ve run into trouble because of Covid-19, and a tailor-made solution will be found for them, Banking Association South Africa said in a statement on Thursday.

Grant Ravenscroft, 51, who started Johannesburg restaurant Croft & Co. in 2006, recently moved to a bigger premises and found business started with a bang. But that has slowed right down as the number of infections in South Africa grew. Banks have been slow to respond to his requests for assistance sent about a week ago.

“It’s dire for many small businesses and I can’t see three or six months down the line,” he said. “As long as there is fear, people will stay away and so even after a shutdown, it’s hard to know what it will look like.”

The approach by South Africa’s commercial banks contrasts with stimulus measures around the world to use banks to keep greasing the economy’s wheels. In Turkey, lenders offered customers relief from repayments for three months, and up to 12 months for companies.

“You need to look at this on a nuanced basis,” said FirstRand Ltd. Chief Executive Officer Alan Pullinger. “Some of our customers don’t need any help, don’t want any help and can happily continue to make their payments. They could even be irritated if we stopped the payments on their facilities. There are customers that may need help and we are reaching out to them.”

‘Different scenario’
In some other markets where mortgage payments were suspend, these were done with the backing of government’s Treasury departments, which isn’t the case in South Africa, he said. “That’s obviously a very different scenario and it’s easier for the banks to say ‘we can offer help to all of our customers.’”

Banks will be asked to step forward to help lift growth in the economy, which was in a recession even before the coronavirus spread, Pullinger said. “That means that the banks need to be in decent shape. We also need to manage our businesses in this period. We will look after customers but we also have to look after ourselves so that we can do our jobs when we get through it.”

Calls for more action come after a labor union known as Sasbo, which represents 73,000 banking employees, slammed companies for not informing staff on how the 21-day lockdown, which begins midnight Thursday, will affect workers.

While Standard Bank Group, South Africa’s largest bank, has offered small businesses and students a three-month payment holiday, its peers — including Absa Group and Nedbank Group – have urged customers to proactively contact them. Arrangements could include suitable payment deferrals, the restructuring of debt or the provision of small and medium enterprise bridging finance.

Read: Standard Bank provides Covid-19 debt relief for SMEs, students

“We will take all possible steps to assist customers in financial distress,” Absa said. Any meaningful cushioning of customers would likely flow from the collective effort of the banks as a “fragmented approach would not go far enough.”

Nedbank is not going with a one-size-fits-all approach, the Johannesburg-based lender said.

“We have received many calls and emails from clients enquiring about a wide range of payment arrangements,” Nedbank said. “Due to the increase in the numbers of requests at this challenging and difficult time, our response may be unintentionally delayed.”

© 2020 Bloomberg L.P.

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Ah the Trade Unions and their gimme mentality is so self centred. Why are they not helping their members in this crisis – always looking for somebody else to bail them out

That is our cosy banking cartel. All in it for themselves.

The banking sector controls SA’s pace of growth or lack thereof.

Un-transformed and unrepentant.

Maybe you should talk to a real banker to understand how slim their margins really are.

Hi, I’m a “real banker”.

ROE:
Standard Bank 16,2%

ANZ Bank 11,93%
Citibank 9,25%
Lloyds Bank 4,26%

Just a brief sample – afraid the figures tell the “real story” about profitability.

Haahahah

What “special” divine insight does a bank have to distribute credit?

Oh yes like Goldman said ” they are doing god’s work”

banking can be a function of the state see CHINA

Check out Investopedia – an ROE of 15%-20% is considered good – only 1 of your stated Banks achieve this goal – hardly something to write home about

Yes, the South African bank….I think his point went totally over your head….

Octavian – Really

And they wouldn’t act worse if they were transformed?

We are a nation of children. This crisis has confirmed that for me.

Dear trade unions – private banks are NOT charity organisations !!!

If you want to be charitable open your own bank with your own money !!

Now if you want da free maaney then tuma lo squirrel or do some cash in transits.

I can agree that certain banks are to say the least reluctant to assist small businesses.
This despite all the promises made publicly.
Our small businesses are going to sink, however banks are just interested in generating income.

Nedbank urging clients to contact them. What a way to look good in the media.
I have tried, and walked right into a sort of sorry no, answer. I am a small business owner with certain financial obligations to fulfill so I will not be able to pay my bond and other expenses like salaries, etc.
What do I do?
All my business is with Nedbank , from my bond, credit cards, business account, so it is not as if one will disappear over night.
They are only interested in covering their own base.

Though your post is not specific to the article – my recommendation to you would be to determine who said “no” and then ask to speak to that persons boss – there are layers of decision makers in Banks and provided your business case is sound I can’t see them not supporting you in some way or other. Try it

Many layers!!! LOL!!

All system based mate! Days of personal empathy and morality do not exist in banks these days!

Banks are ”Holier than Thou” – when it suits them…that is why the Randgold minority shareholders are suing Investec for billions!

Not relevant – Investec is not a Bank they were never subject to ROCO or clearing house rules

Well said – with Ninety One on its good legs now – Investec could become another Banking ”Mom and Popshop” – I am convinced that they will lose the Randgold Minority Shareholders court case – with another ZAR 3 to 4 billion down the ”old SA style banking” drain!

What I do not understand is how the readers of these articles on this website can blame the bank for not doing more. Banks are nothing else than a middle man who brings willing depositors (people with money) in contact with aspiring lenders.

The banks first and foremost responsibility is towards their depositors who want their capital repaid with some interest.

The process of giving loans by using the deposits that had been made at a bank are strictly controlled by the SARB.

There is no big bag of money lying in their vaults ready to be dished out to all and sundry.

Any person who can read a balance sheet will understand than banks have little money of their own.

You must work for a bank…LOL!

Never worked for a bank at all, just able to read and comprehend a balance sheet. Have retired more than 14 years ago.

Ah, the communist, gimme club teamsters at it again!

End of comments.

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