Bank exposure to R699 scheme totals R2.7 billion

By Staff Writer
Exclusive: By Angelique Ruzicka, editor, Justmoney

Standard Bank has exclusively revealed to Justmoney that it financed a total of 3,660 clients who purchased vehicles through the Satinsky Group to the value of R468 million. “This group of accounts continue to perform well and in line with the broader portfolio,” added Ross Linstrom, spokesman of Standard Bank. 

Earlier today Justmoney exclusively learned that Nedbank’s vehicle finance division Motor Finance Corporation (MFC) had the most exposure to clients that applied for vehicle finance through Satinksy Group.  MFC had financed R1, 6 billion at 30 June 2014. 

Over the weekend it was reported that Absa had R700 million worth of exposure to the R699 car scheme.  The latest revelation by Standard Bank has pushed the overall exposure to the R699 car scheme by the banks to R2.768 billion. 

A matter of great concern
“The issue of Satinsky and the situation some of our clients are facing continues to be a matter of great concern to MFC Nedbank and we’re committed to helping clients on a case by case basis,” said Thembi Malabi senior communications officer of Nedbank.

Nedbank made assurances that it had offered finance by the book. “While MFC Nedbank was not privy to or involved with these agreements between client and Satinsky, MFC assessed the client’s application for finance based on the full vehicle value, instalment amount and affordability, within the responsible lending framework of the National Credit Act. At no stage was any form of dealership rebate, subsidy or lead fee factored into MFC’s financing decision.

“Individual MFC clients who have purchased vehicles through the Satinsky Group since 2007 amount to approximately 14 000, with a collective outstanding exposure of R1, 6 billion at 30 June 2014. Affordability assessments were done using our normal credit scoring models without taking account of any possible income from marketing fee agreements that these clients may subsequently have entered into through this dealer channel. Our impairment levels for this book take into account the higher risk profile of some of these clients and are adequate. As at 30 June 2014, R87m of this book was non-performing. 

“Not all these deals can be attributed to the R699 offer, and they form only a portion of the above and Satinsky operated two types of dealerships: bricks and mortar, and virtual – where presumably most of the R699 deals were signed up,” added Malabi.

Arrie Rautenbach, head of Absa Retail Banking, said that Absa was still investigating the Satinsky car loan scheme. “However, our absolute priority is our customers and when we fall short we will work hard to put it right, taking action quickly and decisively,” he said.

Class action?
Port Elizabeth based attorney Duncan Heuer of PCF Attorneys is bringing an application to the courts to have the R699 vehicle owners certified as a class so that the group can bring a class action suit against Satinsky group and the three major South African banks (Standard Bank, Absa and Nedbank’s Motor Finance Corporation) that lent them money to buy new cars. The R699 hearing is set to take place this week Thursday (7 August).

Many R699 scheme members have been approached by the banks to restructure their loans and those that have struggled to meet payments have taken on the offers. However, lawyers representing some R699 scheme members are advising against this. 

Annerine Du Plessis, a lawyer for Schnetlers Inc, has advised her clients to get their credit documents, and original loans documents in order and told them not to restructure their loans until the results of the hearing on Thursday were known.

However Ian Wason, CEO of DebtBusters, told Justmoney’s sister website, Moneybags, if customers are struggling to meet payments that it’s not wise to stop paying the instalments or refuse to negotiate for a better deal as they [the banks] can take legal action against clients who don’t pay. 

Wason advised that if clients were having problems repaying loans, that they should get in touch with their bank to work out a better payment option or seek the advice of a debt counsellor.  

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