FNB denies inflated bond rates for blacks

2012-03-19 17:22

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.

  • Nicola - 2012-03-19 17:47

    I think Noseweek has been reckless in their reporting. How would it be possible to know that most of the affected clients are black. Surely FNB does not store lists of clients based on their race, so how would Noseweek be able to make such a claim.

      Ruth - 2012-03-19 17:52

      Have you actually read the Noseweek article, Nicola? There is so much evidence and precedence. FNB need to rectify this, it has been going on for years. They have solid EVIDENCE from 1992 to present that clearly show huge discrepencies. FNB are Spin-doctoring. Perhaps they should rectify their wrongs first.

      Ruth - 2012-03-20 09:39

      "It was apparent to FNB that Saambou had engaged in business practices that, whilst legal, may not have been appropriate," Marais said. So, if FNB is such an ethical bank, why did they THEN (in 2002) not rectify those accounts. Carte Blanche, Noseweek... all have reported on this matter for years. The fact is that FNB had MANY YEARS to rectify the situation and chose not to, as it was better to sit on the millions generated while many folk lost their homes and livelihood. What is legally right, is not necessarily what is ethically right, and clearly FNB felt no shame taking people's homes, turning an extra buck based on the legality of the situation, versus behaving ethically.

  • John - 2012-03-19 17:56

    I would suggest that most of Saambou's clients were white, and probably Afrikaans.

      Khanyisa - 2012-03-23 12:50

      with what evidence. or are you using the fact thats called saambou. come on

  • Jason - 2012-03-19 17:56

    Question here is can they link higher bond rates to anything else other than colour what about risk, income group and deposit. Anyway as a customer you should really shop around.

      Bongani - 2012-03-20 08:45

      Jason you seem to suggest that blacks are high risk than other races, i worked for a bank and i would like to tell you that people are the same. debt and poor account management has no colour.

  • dave.leverton - 2012-03-19 17:57

    " the article contains unsubstantiated and reckless allegations of discrimination that have no factual basis." Feel free to sue Noseweek if you are so sure of that. If not, why not. - 2012-03-19 18:23

      There is a good reason why Noseweek never gets sued. Not just in this case They structure themselves so they are worth very little (asset wise) and are therefore legal-proof Someone has to spend lots of money for very little gain to go after Noseweek

      Gomoco - 2012-03-19 19:06

      go for it FNB sue noseweek so more can come out

      Holden - 2012-03-20 02:07 Where have you been? Noseweek was sued less than three weeks ago by 'fashionista' Inge Peacock and Noseweek won. Noseweek was sued in September 2007 by FNB and Noseweek won. Noseweek was sued in April/May 2007 by Johnny Ray - of the fake 0861Travel franchises - and Noseweek won. Noseweek was sued in 1994-6 by retired American dentist Robert Milton Hall - and Noseweek won.

      Gary - 2012-03-20 12:00

      Holden.... David Baker is absolutely correct. Each issue of Noseweek is published under a seperate limited liability company..that way you can only sue that issue and the proceeds thereof. so lots of suing, still gets you very little money. perhaps not ethical (if they slander) but certainly not illegal to turn an FNB phrase.

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