The Unused Facility Fee - from Standard Bank

[Houses4Rent]

African Bank is burning already. Their focus is on micro lending, serves them right in my view as its exploiting the poor.

[callen]

@ alice Rain this is the sort of thing that got the global financial system burning in 2008-2009. Started on wallstreet subprime morgage securities were sold world over to banks and investors with their values overinflated (bubble). So when the underlying assets showed their thrue colors the global financial system buckled everyone including innocent taxpayers were burnt. Now in your case you were sold credit when your credit profile was saying no. Yes the bank will make a profit from that transaction especially if u somehow pay up and the employee gets her compansation. It is the ordinary tax payer who suffers. We can't let standard bank fail coz its too impotant to the economy so we will have to take tax payers money to cushion standard bank from failing while holding that toxic asset. Also the toxic asset raises costs for everyone as the bank will make an attend to earn capital to cover that loss. Just tryed to simplify the complex.

[Dave A]

We can't let standard bank fail coz its too impotant to the economy so we will have to take tax payers money to cushion standard bank from failing while holding that toxic asset.

Erm... Are you sure you really meant Standard Bank there?

[callen]

This is the thinking that regulators world over have that even saw bailing out of banks en mass! And today Portugal has just done it. Some big banks (Standard bank is one of the biggest bank in Africa by assets and lending book . So its systemically important not only to south Africa but to Africa). So its collapse will certainly get regulators animated ready to spent taxpayers money - and agreeably so because they 'watch' these banks getting too big to fail through accumulating very risky assets and yet they are supposed to be on the watch on our behalf.

[callen]

"Serves them right" I don't think so! The loser here is the economy of south Africa! World over (the Asian tigers, Germany etc) economic turn around was built on the foundations of micro lending to SMMEs. the Germany Economy has been resilient from the European debt turmoil partly because more than 30% of the economy is controlled by SMMEs in Asia 53%. "exploiting the poor" certainly not, infact its absence if allowed to happen will certainly lead to the exploitation of the poor. your sentiment is based on the high interest rates they charge for these loans. research has consistently proven that if the poor a given smaller loans (micro) to invest in micro enterprises (not consumption) they can meet the risk return payoffs and earn extra to advance their welfare hence the success of these models. in the case of our environment the micro consumer is more into consumption and I cannot blame them for that ! the education has not empowered many for businesses.

[Dave A]

Could we get off Portugal and generic "too big to fail" stuff for a moment and snap back to what you have implied -

Do you believe that Standard Bank is on the verge of failing and requiring a government bail out?

Houses4Rent has mentioned African Bank facing a challenge right now, which seems fair comment. But Standard is looking rock solid with absolutely no prospect of needing a government bailout anytime soon, or ever a.f.a.i.k.

[callen]

Hey Dave A you got me wrong there. I never implied that standard bank are on the verge of failing how can that be they are doing well. The best bank in Africa from (simple, better, faster) to moving forward! I was trying to interpret the complex web of toxic assets using Standard Bank as an example of how regulators thinking is if a bank like standard bank gets on the verge of failing.

[Dave A]

Thanks for clearing that up, Callen