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FNB denies inflated bond rates for blacks

Mar 19 2012 17:22 Sapa

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Johannesburg - First National Bank denied on Monday that it has been charging black bondholders illegally inflated interest rates.

"The bank strongly rejects any allegations of racism," FNB housing finance CEO Marius Marais said.

He was responding to allegations in Noseweek magazine that FNB, which took over 80 000 clients from Saambou when it collapsed in 2002, had been overcharging them.

"Saambou had for years been charging their bond clients an illegally inflated interest rate, and been calculating the interest in an illegal manner, resulting in all these accounts reflecting hugely inflated outstanding balances," Noseweek reported.

"FNB has for the past 10 years failed to rectify the position, regularly proceeding to seize clients’ homes and sell them in execution, based on false outstanding balances - which they know to be false - when, as often, the client has in fact long paid off his or her loan and it is the bank that owes the client tens, if not hundreds, of thousands of rands."

Noseweek reported that the "victims are almost exclusively black".

Marais denied the allegations.

"The recent article published in the March 2012 edition of Noseweek is deeply concerning to FNB, as the article contains unsubstantiated and reckless allegations of discrimination that have no factual basis."

Marais said the Noseweek article furthered the agenda of individual interest recalculators.

"The article further positioned these reports in a manner aimed at furthering the agenda of individual interest recalculators, who have for many years and in a multitude of often unorthodox methods, sought to challenge the business practices of the erstwhile Saambou Bank for their personal financial gain."

Marais said FNB had taken every step to rectify the errors inherited from Saambou.

He said Saambou was placed into curatorship in 2002 and the high court in Pretoria then sanctioned a scheme of arrangement in accordance with section 311 of the Companies Act.

In terms of this, FNB acquired certain assets and liabilities of Saambou Bank, including the various home loan books.

"It was apparent to FNB that Saambou had engaged in business practices that, whilst legal, may not have been appropriate," Marais said.

"The bank recalculated the acquired Saambou accounts based on a set of carefully considered principles and in June 2006 offered a R154m refund to Saambou customers."

Marais said despite this offer, some people with a vested interest continued to pursue allegations related to Saambou's method of interest calculation.

"FNB has publicly stated that it welcomes legal finality on these matters and actively pursued a trial date that was scheduled in the North Gauteng High Court (in Pretoria) in November 2011.

"The case was delayed at the request of the plaintiff and eventually deferred to a later date. As a result the bank was awarded full costs associated with the delay," Marais said.

The plaintiff is Emerald van Zyl, a bond recalculator who is coordinating the matter for the former Saambou clients.
first national bank  |  interest rates  |  racism
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