Finance Minister Enoch Godongwana says the curatorship of Habib Overseas Bank is aimed at dealing with its governance, compliance and operational failures; and unlikely to impact other banks in the “healthy and robust” local banking sector.
He said the curatorship was not related to recent difficulties with banks in the US and Switzerland, nor was Habib Overseas Bank related to Habib Bank AG Zurich (HBZ), which also operates in South Africa and is not under curatorship..
He said Habib Overseas Bank remained liquid and would continue to operate through the curatorship, subject to the assessment of the curator. He said its liquidity coverage ratio was above the regulatory requirement, and there were no immediate concerns for depositors.
Habib Overseas Bank is a small financial institution that was licensed as a bank by the SARB in 1990. It provides, among other things, term loans, overdrafts, mortgages, bills of exchange and credit facilities to customers in South Africa.
The minister said in a statement that over the past four years, the PA had intensified supervision of the bank because of weaknesses in it’s governance process, its internal control environment, as well as the investigations and reviews that had confirmed non-compliance with various financial regulations.
This non-compliance was also related to “significant findings” relating to breaches of exchange control regulations.
“Having duly considered the continuing failure of the bank’s Board of Directors and management to deal effectively with the weaknesses in controls and its poor regulatory compliance, as well as the growing risks over its ability to meet future obligations as required by the Banks Act 94 of 1990 and the Regulations relating to Banks, the Minister of Finance, on a recommendation from the PA, decided to place Habib Overseas Bank under curatorship with immediate effect. This is being done to proactively protect the bank’s depositors,“ the statement said.
PricewaterhouseCoopers Inc has been appointed as the curator, with Craig du Plessis as the representative of PwC responsible for Habib Overseas Bank with immediate effect.
The curator would assume the powers of the board and management, and would recover and take possession of all the assets of Habib Overseas Bank.
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