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UBank Under Curatorship

UBank placed under Curatorship

On 16 May 2022 the Minister of Finance, in consultation with the Prudential Authority (PA), placed Ubank Limited (Ubank) under curatorship with immediate effect. This was done to proactively mitigate the adverse consequences on Ubank's depositors, and to preserve the stability of the South African banking and financial services sector as a whole.

Ubank is a bank, duly registered as such in terms of the provisions of the Banks Act 94 of 1990, which means that it falls under the supervisory and regulatory ambit of the Prudential Authority. The bank has a long history of providing basic financial services to mine workers and their families for more than 40 years. In 1975, Teba Cash Financial Services was formed to provide mine workers with basic financial services. These included facilitating the remittance of funds to families and dependants in the rural and labour sending areas using a linked account facility.

In the early 1990s, the Godsell Motlatsi Commission was formed, leading to the transition from a savings fund to a commercial bank. By June 2000, Ubank (then Teba Bank) was granted a banking licence, although its ownership remained in the form of a Trust managed/administered by trustees who are elected by the National Union of Mineworkers (NUM) and the South African Chamber of Mines (now known as Mineral Council South Africa (MCSA)). The beneficiaries of the Trust are the bank’s customers. Teba Bank became Ubank which was launched to the public on 1 October 2010.

Ubank provides basic financial services and products to its customer base in four basic categories: transactions, credit, savings and insurance.

Over the last couple of years, the Prudential Authority intensified its supervision of Ubank due to corporate governance concerns, a high number of internal control weaknesses, and the prolonged period it has taken to inject sufficient capital to:

Comply with minimum capital requirements;
Diversify the bank's business model; and
to ensure the future sustainability of the bank.

Ubank was unable to raise on time the additional shareholder funding (capital) needed to restore its regulatory capital adequacy; nor was it in a position to provide a satisfactory action plan and strategy that can be implemented and executed in a short period of time to address the capital adequacy requirements. The only option available to recapitalise the bank would be through the sale of its shares to potential investor.

Ubank’s failure to meet its minimum capital adequacy ratio (CAR) of 22.5% continued for more than a year and weakened significantly throughout the period. This was extremely concerning as by end of April 2022, the CAR levels reached approximately 3.3%. The Board of Directors of Ubank thus indicated its intention to resign.

The curatorship is a protection procedure which gives the Prudential Authority the legal means to create the necessary space to implement a resolution plan. It is important to note that Ubank remains highly liquid with a liquidity coverage ratio in excess of the regulatory requirement. The FSCA also assured depositors of continued access to their money and other banking services offered by the bank in its ordinary course of business. There is no need for customers to withdraw their money in a panic.

Quick facts customers need to know:

Who is Ubank’s curator?

KPMG Services Proprietary Limited (KPMG), with director Mr Zola Beseti as the responsible person for the curator team of KPMG. With this appointment, the Board and management of Ubank Limited were relieved of their powers which are now vested with the curator.

Are the depositors’ funds safe and why?

All depositors’ funds remain safe at Ubank which remains highly liquid and with no immediate concerns for depositors. The first task of the curator would be to do an assessment, and if needed the SARB will engage the National Treasury to provide a government guarantee. In terms of government policy, all retail depositors are guaranteed protection up to a certain maximum threshold.

Can customers withdraw their entire balance when they come to Ubank?

Yes, customers’ deposits are safe. While in the process of assessing and stabilising the affairs of the bank and to protect its liquidity, the curator may place some temporary restrictions on fund withdrawals.

Can I close my account at Ubank and go to another bank of my choice?

Yes. It is entirely within the rights of customers to close their accounts and opt for another bank. However, as stated earlier, customers’ deposits remain safe and therefore no need to close their accounts with Ubank

What happens to customers who have loans with Ubank?

These accounts will remain with Ubank, and customers are still obliged to pay their monthly instalments in full.

What is the total value of all retail depositors’ claims?

Approximately R4.8 billion.

How many customer accounts does Ubank have?

There are approximately 4.7 million accounts.

Which Ubank branches will remain open?