Banks worry over workers repaying debt
BANKS yesterday said they were concerned about striking miners being unable to keep up their loan repayments, but said the risk was not too significant.
Ubank, a retail bank used by mineworkers mostly aligned with the National Union of Mineworkers (NUM), could be the most affected as its customer base is tilted towards mineworkers.
African Bank Investments Limited (Abil), the biggest lender of unsecured loans, and Capitec said they intended accommodating their mineworker clients in these trying times rather than handing clients over for debt collection.
Abil said its exposure to the mining sector was just over R2bn at present, representing about 4% of its total book.
"While employees with existing loans do not receive an income we are seeing an up-tick in missed instalments. This will result in an increase in provisions raised against that book," said Markus Borner, executive of balance sheet management at Abil.
"Once wage negotiations are finalised, and if employees do not lose their jobs and over time increase their income, this will result in missed instalments being caught up subsequent to the implementation of increased salaries."
Mr Borner added that Abil staff manning the kiosk at Lonmin’s Marikana mine had been relocated to the Rustenburg branch. "Notwithstanding this, applications will typically decrease in turbulent times such as these and this factor, together with the relocation of staff and the normal credit-granting criteria requiring proof of income, is resulting in significantly lower business in the affected sectors."
Capitec spokesman Charl Nel said the bank could not divulge numbers as it is in a closed period ahead of its results being disclosed. But it also believed that the exposure was not significant.
FirstRand’s spokeswoman, Sam Moss, said the bank’s total exposure to the mining sector represented 3% of total advances and this did not represent a significant concentration of risk.
Peter van Kerckhoven, co-head of resources finance at Nedbank Capital, said it had significant exposure to SA’s mining sector and if there were sustained strike action at other operations, it would pose a risk to its funding.
Absa said it was not overexposed to the mining industry and provisioning had not been affected. Like Capitec and Abil, Absa said it would support its clients in these trying times.
Standard Bank said it could not comment on exposures or the activities of any of its clients. Ubank could not comment at the time of going to press yesterday.
Mineworkers at Lonmin’s Marikana mine near Rustenburg were on strike for more than a month until Tuesday, while at Gold Fields a wildcat strike has been continuing for 10 days.
Usually when workers engage in an illegal strike, employers implement the principle of "no work, no pay".