| Wed 27 Oct 2004, 10:48 | | Saambou crash debacle likely to cost taxpayers les |
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Saambou crash debacle likely to cost taxpayers less than feared
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THE collapse in 2002 of Saambou, which at the time was SA`s seventh-largest bank, could ultimately cost the taxpayer about R4,5bn, significantly lower than the R6bn previously estimated.
In the medium-term budget policy statement, released yesterday, the national treasury said the contingent liability from Saambou, which will be settled in government`s 2007-08 financial year, was expected to be about R4,5bn.
The money is owed to FirstRand Bank, which took over Saambou`s R4,9bn home-loan portfolio in May 2002, three months after the bank was placed under curatorship. In return for the portfolio, FirstRand agreed to also take on Saambou`s R12,8bn retail deposit book, which effectively left the group with a shortfall of R7,9bn.
Proceeds from the sale of Saambou`s remaining assets have been used to pay creditors and settle the loan to FirstRand, which is still accruing interest.
John Louw, the court-appointed receiver of Saambou, agreed that about R4,5bn would ultimately be outstanding.
`We initially estimated we would recover at least R2bn of that (the liability), which is how we arrived at R6bn,` Louw said yesterday. `We have recovered beyond that and we are still in the process of recovering assets.`
Louw said the original sale agreement stipulated that the winding up of Saambou, which is still under receivership, had to come to a conclusion on August 31 2007, five-and-a-half years after it was first placed under curatorship.
`You don`t just wind up a bank overnight,` he said. `It takes a long time to dispose of assets in an orderly manner.`
Apart from selling and collecting assets, Louw said there were damages claims against Saambou that also had to be resolved.
Louw said although he was still pursuing some asset collections, they were small and would ultimately be negated by the interest accruing on the loan to FirstRand.
He said about eight different deals had been struck to date, including the sale of the Saambou`s personal loan book to African Bank Investments for about R1,25bn and its asset-based finance division, Planet Finance, to Imperial Bank for R838m.
Saambou was placed under curatorship in February 2002, after a run on the bank saw it lose R1bn of retail and wholesale deposits in just two days.
Depositors withdrew their cash after rumours of a liquidity squeeze at the bank led to wild swings in its share price.
Saambou`s collapse ultimately led a crisis of confidence in the banking industry, resulting in liquidity problems at the country`s sixth-largest bank, BoE. This has since merged with Nedcor.
