SA to bailout Land Bank after debt default

Will receive R5 billion in 2021-22, and R1 billion in each of the two subsequent fiscal years.
Image: Waldo Swiegers/Bloomberg

South Africa’s National Treasury allocated R7 billion ($481 million) to recapitalise the country’s distressed state-owned agricultural lender after it defaulted on its debt last year.

The Land and Agricultural Development Bank of South Africa will receive R5 billion in 2021-22, and R1 billion in each of the two subsequent fiscal years, the National Treasury said in the Budget Review on Wednesday. This will be funded by reallocating money from other departments and programs that will be identified in the October medium-term budget policy statement.

The Land Bank has been battling to repay its debt since a drought caused many of its customers to default on their loans. Its allocation is the only major bailout to a state-owned company in this year’s budget.

The minister of finance “will impose appropriate conditions on the equity support to put the Land Bank on a stable and sustainable development path,” the Treasury said.

The Land Bank had proposed that the Treasury partially guarantee new notes it would issue as part of a restructuring, but the finance ministry rejected that option last month.

The 109-year-old bank, which owns almost 30% of loans to South African farmers, received R3 billion from the Treasury last year, which allowed it to resume interest payments and cover arrears on its debt.

© 2021 Bloomberg

COMMENTS   2

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.

SIGN IN SIGN UP

“ This will be funded by reallocating money from other departments and programs that will be identified in the October medium-term budget policy statement.”

Not true. SAA and Eskimo will receives bailouts

I would have thought Landbank loans are secured loans, so how did the defaults hit them this hard? After sale of the securing assets they should have been able to recover everything or most of it?

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

TAX CALCULATOR  

How much do you earn per year?
How old are you?

Income:
Total tax:
Rebates:
Income after tax:

Income:
Total tax:
Rebates:
Income after tax:
Moneyweb is a financial, investment news provider and not a tax- or financial advice authority. Please contact Sars or a registered tax practitioner for any tax-related queries.
 
 

ECONOMIC DATA  

  CPIThe Consumer Price Index (CPI) measures monthly changes in prices for a range of consumer products Mar 2021 2.90%
  CPI ex OERThe Consumer Price Index excluding Owners’ Equivalent Rent (CPI ex OER) measures monthly changes in prices for a range of consumer products excluding Owners’ equivalent rent that measures changes in the cost of owner-occupied housing Mar 2021 3.10%
  RepoThe rate at which the Reserve Bank lends money to the country’s commercial banks and set by the Reserve Bank’s Monetary Policy Committee. Apr 2021 3.50%
  Prime lendingThe Prime Lending Rate is the rate of interest that commercial banks will charge their clients when issuing a loan (home loan or vehicle finance) Apr 2021 7.00%
USD/ZAR
GBP/ZAR
EUR/ZAR
AUD/ZAR
Yuan/ZAR
INSIDER SUBSCRIPTIONS APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING PORTFOLIO TOOL CPD HUB

Follow us:

Search Articles: Advanced Search
Click a Company: