SHARES in African Bank Investments Limited (Abil) dropped as much as 6% to R28.76 on Friday (08/02/2013) afternoon after the National Credit Regulator recommended that the unsecured lender be fined R300m for alleged fraudulent activities.
The bank is contesting the fine and is expected to have a legal showdown with the regulators over the matter.
"The fraudulent activity related to manipulation of African Bank’s affordability calculations and affected 397 customers and loans to the capital value of R15.5m‚” African Bank said in a statement on Friday.
"After a thorough internal investigation‚ three agents were dismissed for fraud. It was found that in the majority of instances‚ customers colluded with these agents and made illicit payments to the agents in return for granting the loans.”
The National Credit Regulator has recommended that the National Consumer Tribunal impose the fine.
African Bank‚ which is South Africa’s largest unsecured lender with a loan book of R53bn‚ said one of its internal investigations teams discovered in November 2011 that its loan origination system had been "fraudulently breached by agents” at its branch in Dundee.
African Bank said after the investigation it wrote off and rescheduled the affected loans‚ and corrected the customers’ profiles on the credit bureau.
The bank believes the fine is unwarranted given that it was an isolated incident and the bank has suffered financial loss.
African Bank said it had previously been subjected to a number of processes by the regulator and had never been found to be reckless.
"African Bank’s purpose is to impact positively on people’s lives through the provision of credit-led‚ risk-based financial services. Our business is based on robust IT systems and the belief that our staff and customers engage with honesty and integrity‚” CEO Leon Kirkinis said.
"Unfortunately three of our staff members chose to contravene our ethical standards through their fraudulent behaviour. We retain the belief that our staff operate with the required honesty and that this was an isolated incidence.”
At 2.05pm Abil’s share price had retraced some of its earlier losses‚ to trade 3.04% lower at R29.67. Peer Capitec was down 1.03% at R192.50. © BDlive 2013