AFRICAN BANK LIMITED - Probe By The National Credit Regulator

Probe By The National Credit Regulator

AFRICAN BANK INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registered bank controlling company)
(Registration number 1946/021193/06)
Ordinary share code: ABL ISIN: ZAE000030060
Preference share code: ABLP ISIN: ZAE000065215
("ABIL" or “the group”)

AFRICAN BANK LIMITED
(Incorporated in the Republic of South Africa)
(Registered bank)
(Registration number 1975/002526/06)
Company code: BIABL
(“African Bank”)


PROBE BY THE NATIONAL CREDIT REGULATOR

The National Credit Regulator (NCR) announced in October 2012 that
it was investigating a number of lenders including African Bank
for possible reckless lending. The investigation focused on
fraudulent activity at one of African Bank’s branches. The NCR has
now advised African Bank that it has referred the matter to the
National Consumer Tribunal and has proposed that the Tribunal
impose a fine of R300 million.

African Bank continuously monitors its staff and its origination
system for compliance with internal policies and the National
Credit Act (NCA). In November 2011, one of the Bank’s internal
investigative teams discovered that the loan origination system
had been fraudulently breached by agents at African Bank’s Dundee
branch.

The fraudulent activity related to manipulation of African Bank’s
affordability calculations and affected 397 customers and loans to
the capital value of R15,5 million. After a thorough internal
investigation, three agents were dismissed for fraud. It was found
that in the majority of instances, customers colluded with these
agents and made illicit payments to the agents in return for
granting the loans.

African Bank granted approximately 4 680 000 loans in the period
that the fraudulent loans were granted. The loans constitute 0,01%
of the total loans granted by the Bank during this period.

Upon conclusion of the internal investigation, the Bank wrote off
or rescheduled the affected loans and corrected the customers’
profiles on the credit bureau where necessary.

African Bank has handed the matter over to its attorneys and
contests the reckless lending allegation made against the
organisation. Given that this was an isolated incident as a result
of fraudulent activities and the organisation has suffered a
consequential financial loss, African Bank believes that the
proposed fine is unwarranted given the facts and circumstances. It
is important to note that African Bank has been subjected to
numerous reviews by the NCR over the years and has never been
accused by the NCR to be reckless.

We welcome the matter going to the National Consumer Tribunal
where the merits of the case will be heard and further
developments will be communicated in due course. We support any
steps that strengthen the industry as the financial wellbeing of
our customers is of paramount importance to us.

ABIL’s CEO Leon Kirkinis says: “African Bank’s purpose is to
impact positively on people’s lives through the provision of
credit led, risk based financial services. Our business is based
on robust IT systems and the belief that our staff and customers
engage with honesty and integrity. Unfortunately 3 of our staff
members chose to contravene our ethical standards through their
fraudulent behaviour. We retain the belief that our staff operate
with the required honesty and that this was an isolated
incidence.”


Midrand
8 February 2013

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)


Media Contact

Louise Brugman – 011 787 3015, 083 504 1186

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