Small South African bank Mercantile Lisbon Bank Holdings Limited became the latest victim of the woes hitting the sector on Tuesday when it warned it had suffered losses for the year and would require more capital.
”Notice is hereby given to shareholders that the company has incurred a substantial loss for the year ended 31 March, 2002,” it said in a statement.
”The loss arises primarily from the need to make substantial provisions against non-performing advances and includes further provisions since the announcement of the interim results.”
South African banks have taken a series of hard knocks since the start of the year, starting with a profit warning at big bank Absa after small loans unit UniFer said it would make a loss because of inadequate provision for bad debt.
UniFer shareholders approved an offer by Absa to minorities on Monday for a full takeover of the subsidiary.
Mercantile, more than two-thirds owned by Portuguese state bank Caixa Geral de Depositos (CGD), said it was likely it would need further capital enhancement and was considering options.
But it moved to assure depositors and other shareholders of CGD’s backing. It said CGD was the largest financial group in Portugal.
”CGD is willing to safeguard the financial soundness and stability of Mercantile, including the maintenance of capital adequacy,” it said.
Fears of the industry’s overexposure to the risky small loans sector in the wake of UniFer triggered deposit runs at number six and seven banks BoE and Saambou, which are in the process of being taken over. – Reuters