NICOLE MORDANT, Johannesburg | Wednesday 7.00pm
THE Reserve Bank said on Wednesday that a run on FBC Fidelity Bank, which followed South Africa’s largest corporate collapse, does not threaten the financial system and will not scare off investors.
Deputy Reserve Bank Governor Timothy Thahane said that although the Bank took troubled FBC Fidelity Bank Holdings under its wing on Monday, its liquidity crunch will not pressure the country’s overall robust banking system.
”Foreign investment is affected not so much by episodic institutions that fail, but it is more a generalising [of failures], which we do not have,” Thahane told an investment conference in Cape Town.
”We have very well capitalised, sound banking institutions, but that does not mean that we won’t have specific problems here and there,” he said.
Niche lender FBC was put under the management of an independent accountant, called a curator, by the Reserve Bank on Monday after it was hit by heavy withdrawals. This followed news that it had a R30-million unsecured exposure to Macmed Health Care. Macmed sought liquidation earlier this month owing 16 banks around R1-billion in the country’s largest corporate failure.
At least one other niche bank has hinted at the negative impact on its earnings stemming from its Macmed exposure. Analysts worry that concern could spark further withdrawals, creating the danger that more banks could suffer a squeeze on funds.
Thahane said that although the health care group’s looming demise has serious implications for smaller bank creditors, he is confident the fallout would be contained. — Reuters