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By Renee Bonorchis
March 27 (Bloomberg) -- Standard Bank Group Ltd., Africa’s largest bank, fell for a second day after the lender admitted to breaking South African credit laws.
“Whenever there is contravention of the rules it points to a failure in risk management and compliance,” Jan Meintjes, a director at Gryphon Asset Management Ltd. in Cape Town, said in an e-mailed response to questions today. “This should raise some concerns.”
Standard Bank’s share price fell 3.10 rand, or 3.8 percent, 78 rand, after sliding 6.3 percent yesterday, the worst performer on the five-member FTSE/JSE Africa Banks Index. The stock has lost 17 percent over the past 12 months, giving Standard Bank a market value of 119 billion rand ($12.4 billion).
Sim Tshabalala, chief executive officer of Standard Bank’s South African unit, said yesterday the lender was “sorry and embarrassed” for contravening South Africa’s National Credit Act by automatically increasing the limits on some clients’ credit cards. The lender had raised limits on 61,000 customer accounts without permission from clients, 702 Radio reported.
Bad loan impairments at the retail banks of Standard Bank, Absa Group Ltd., FirstRand Ltd. and Nedbank Group Ltd. more than doubled last year after South Africa’s central bank raised its benchmark rate six times to 12 percent in the year through June 2008. South Africa’s National Credit Act was implemented in June 2007, protecting consumers by tightening lending controls.
‘Operational Slip-Up’
While Standard Bank “is obviously in the wrong” it was more of a “compliance failure than a deliberate strategy to contravene the Act,” Meintjes said. “I don’t believe Standard Bank is taking its eye off the ball in South Africa. It knows very well that market conditions are tough in the local market and it has competent people,” he said.
Standard Bank said it does not expect to be fined by the National Credit Regulator because the process was terminated as soon as senior executives realized the “oversight,” Tshabalala said. A provision in the law allows lenders to avoid penalties if transgressions are rectified without the regulator resorting to action. Standard is in talks with customers and regulators.
It was “a small operational slip-up with no major implications with respect to the quality of management,” Jonathan Rawicz, a banks analyst at Nedgroup Securities, said.
To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net
March 27 (Bloomberg) -- Standard Bank Group Ltd., Africa’s largest bank, fell for a second day after the lender admitted to breaking South African credit laws.
“Whenever there is contravention of the rules it points to a failure in risk management and compliance,” Jan Meintjes, a director at Gryphon Asset Management Ltd. in Cape Town, said in an e-mailed response to questions today. “This should raise some concerns.”
Standard Bank’s share price fell 3.10 rand, or 3.8 percent, 78 rand, after sliding 6.3 percent yesterday, the worst performer on the five-member FTSE/JSE Africa Banks Index. The stock has lost 17 percent over the past 12 months, giving Standard Bank a market value of 119 billion rand ($12.4 billion).
Sim Tshabalala, chief executive officer of Standard Bank’s South African unit, said yesterday the lender was “sorry and embarrassed” for contravening South Africa’s National Credit Act by automatically increasing the limits on some clients’ credit cards. The lender had raised limits on 61,000 customer accounts without permission from clients, 702 Radio reported.
Bad loan impairments at the retail banks of Standard Bank, Absa Group Ltd., FirstRand Ltd. and Nedbank Group Ltd. more than doubled last year after South Africa’s central bank raised its benchmark rate six times to 12 percent in the year through June 2008. South Africa’s National Credit Act was implemented in June 2007, protecting consumers by tightening lending controls.
‘Operational Slip-Up’
While Standard Bank “is obviously in the wrong” it was more of a “compliance failure than a deliberate strategy to contravene the Act,” Meintjes said. “I don’t believe Standard Bank is taking its eye off the ball in South Africa. It knows very well that market conditions are tough in the local market and it has competent people,” he said.
Standard Bank said it does not expect to be fined by the National Credit Regulator because the process was terminated as soon as senior executives realized the “oversight,” Tshabalala said. A provision in the law allows lenders to avoid penalties if transgressions are rectified without the regulator resorting to action. Standard is in talks with customers and regulators.
It was “a small operational slip-up with no major implications with respect to the quality of management,” Jonathan Rawicz, a banks analyst at Nedgroup Securities, said.
To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net
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