Don’t panic – SA Reserve Bank

By Inhlase

A month after Ubank was placed under curatorship, there are high-level assurances that the bank is operating normally while concerns are being ironed out. While this has been welcomed, the Southern Africa Resource Watch (SARW) says this is an opportunity to overhaul the bank systems to make it easy for migrant mineworkers and their families to access to their funds.

“Ubank has around 4.7 million accounts – mainly among mineworkers and their families. This recent decision is quite alarming and triggering, particularly for migrant mineworkers and their families who have monies banked with Ubank and have faced numerous challenges and obstacles in obtaining these monies.

This includes the institution requiring a letter of authority from the Master of the High Court in South Africa. Southern Africa Resource Watch (SARW) has heard from numerous former mineworkers and their families that acquiring these letters of authority in South Africa poses many challenges, as the bank only recognizes documents issued in the country,” said South Africa Resource Watch (SARW) Communications Officer, Masutane Modjadji in response to a questions from Inhlase.

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 She said given the example of the Venda Building Society (VBS) that resulted in loss of deposits when the bank was declared insolvent and placed under curatorship, the decision to place Ubank under curatorship is triggering.

“We hope the Reserve Bank’s decision to place Ubank under curatorship before its capital inadequacy issues get out of hand will protect consumers and prevent a repeat of what happened with in the VBS matter.

For this reason, SARW applauds the SARB and PA for the swift action to ensure the bank remains intact and is still able to meet its financial obligations,” she added.

The South African Reserve Bank Governor, Lesetja Kganyago placed Ubank under curatorship on May 16 this year pointing to several issues with the bank’s control weaknesses, and corporate governance issues. He has assured the public that the curatorship is nothing to be alarmed by and that it will not affect operations at Ubank.

“The curatorship is a protection procedure which gives the Prudential Authority the legal means to create the necessary space to implement a resolution plan. Customers and staff are encouraged to continue supporting Ubank,” explained the governor.

Appointed curator and director of KPMG, Zola Beseti has echoed these sentiments saying: “I want to emphasise that Ubank will continue to operate during the period of curatorship and the curator will make decisions regarding the continued granting of loans and sound banking activities generally. Retail depositors represent 98 per cent of Ubank’s total liabilities.”

Eswatini Director of Social Security Service Magwabane Mdluli said in short, the Ubank services are still going to be offered as normal and those using this facility have no need to panic.

He said ex-mine workers should not confuse curatorship and liquidation as they are two different things.

 “This means the company’s board will step aside and the curator will then work with the management of the bank to make sure that the institution is stabilised. Asked how long it might take to resolve this, Kganyago said it depends on how deep the hole is,” he said.

Likewise, Swaziland Migrant and Mineworkers Association (SWAMMIWA) executive secretary Vama Jele said they were happy with the move taken by the Reserve Bank against the Ubank.

“This simply means SARB has duty of care for the bank and its proper functioning now rests with the Reserve Bank, therefore we strongly believe that the money is safe under these arrangements taken by the Reserve Bank. We are now seeing the outcome that they really tackled the matter. By lack of better words of emphasis, we are also saying thank you to the leadership of the Central Bank of Eswatini,”he said.

Jele said he believed that most of emaSwati will be looking at this as a relief after so many complaints directed to the Ubank and TEBA relationship which he accused of not being regulated in eSwatini.

“Finally we must say this as ex-miners; the Central Bank and Reserve Bank must also look into how they applied policies to be in line with the regional policies and within the banking sector conduct and compliance for the proper security systems within the arrangements,” he said.

Ubank is owned by The Employment Bureau of Africa (Teba) Fund Trust and is administered jointly by the National Union of Mineworkers (NUM) and the Minerals Council of South Africa.

The bank has a long history of providing basic financial services to mineworkers and their families, such as facilitating the remittance of funds to families and dependents in the rural and labour sending areas using a linked account facility.

Similar sentiments were shared by TEBA’s Operations Support Coordinator Whassef Khan who told Inhlase that:  “Ubank will continue to operate and serve its customers as per normal even though placed under curator. The bank remains highly liquid with a liquidity coverage ratio in excess of the regulatory requirements,” he assured depositors.

He said TEBA, the mining industry and other stakeholders were kept abreast with the ongoing processes within Ubank.

He added that the curator will assist depositors in protecting and securing investments while strengthening the balance sheet of the Bank.

In the same vein the ministry of labour and social security in eSwatini assured ex-mine workers and beneficiaries that they will continue to get services from the Ubank and its agent being TEBA as normal.

Aside from assurances that the Ubank curatorship is not the same as liquidation, the hope is that the curatorship offers an opportunity to address system failures that has made it difficult, if not impossible, for former mineworkers as well as their widows to access benefits owed to them.

In March this year, SARW held a high-level meeting on unclaimed benefits in SADC. Former mineworkers and widows of ex-miners shared stories of how they have been affected by the non-payment of monies due to them – a story that was also published by Inhlase.

One of the widows, Sonto Simelane from eSwatini, recalled how she had to borrow money to bury her husband who worked at the Beatrice Mine when he died in 2019. Now she does not have access to her late husband’s funds to repay the debt. She needs a letter of authority from the Master’s Office in South Africa in order for Ubank to transfer the money to her late husband’s estate. Her funds are still locked at Ubank, while she is accumulating debt.

Simelane has travelled to South Africa twice to try to secure a letter of authority since they do not recognise the letter issued in eSwatini. Because she is illiterate, she has to engage lawyers to help her obtain the letter, but the challenge is that they charge exorbitant fees. The issue of social security benefits for migrant workers and portability has been discussed among SADC countries for years, but no viable solution has been found.

During the meeting on unclaimed benefits, delegates heard that most of the unclaimed social benefits in South Africa are sitting with the metal industry and the mineworkers’ provident funds.

“SARB should clarify how its decision to place Ubank under curatorship will assist widows like Mrs Simelane who so far have been unable to access their benefits. The appointed curators should expeditiously work to resolve the issue of unpaid funds, particularly for migrant mineworkers and their families. SARW believes that migrant workers who seek redress regarding challenges faced in accessing their unclaimed or unpaid social security benefits must be provided with adequate support to ensure they access these funds,” Modjadji said.

She said it is important to identify regulatory barriers and suggest solutions to unlock bureaucratic barriers to unpaid benefits and that SARB’s intervention could pave the way for other government bodies to prioritise resolving issues around social benefits repatriation.