Banks must clarify fate of debt after expropriation – IRR

Apr 01, 2021
1 April 2021 - The Institute of Race Relations (IRR) has asked the Banking Association of South Africa (BASA) to spell out its plan of action on settling mortgage bonds on expropriated property should the Expropriation Bill be passed in its present form.
Banks must clarify fate of debt after expropriation – IRR

The Institute of Race Relations (IRR) has asked the Banking Association of South Africa (BASA) to spell out its plan of action on settling mortgage bonds on expropriated property should the Expropriation Bill be passed in its present form.

In its letter to BASA today, the IRR asks how banks “will … settle outstanding debts on encumbered properties that are expropriated without compensation, or for compensation significantly below market value?”.

Land stands as collateral in approximately R1.6 trillion worth of debt and BASA’s submission to parliament warns that the Expropriation Bill in its current form could trigger a financial crisis by undermining the property rights upon which the capital-allocation system depends.

The IRR points out that where there are outstanding loans on expropriated properties, “either the expropriated title-deed holder will still be obliged to bay back his or her debt in full; or the bank will write off the loan that was connected to the property before its expropriation; or a combination of both. Our question is, which will it be?”

If banks plan to force victims of EWC to continue repaying their loans, this needs to be clearly explained to clients in good faith. If banks plan to absorb any loss by writing off such debts, this needs to be clearly articulated to shareholders as well.

The IRR notes that resolving the current ambiguity around the BASA members’ current plan of action “will, we hope, be a simple matter of stating your intentions in clear terms understandable to ourselves, your clients, and the nation.”

 

Media contacts: Gabriel Crouse, IRR writer and analyst – 082 510 0360; gabriel@irr.org.za

Amy-Claire Morton, IRR Content Producer – 084 867 1141; amy-claire@irr.org.za

 

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za

Kelebogile Leepile Tel: 079 051 0073 Email: kelebogile@irr.org.za

Ends

 

 

Banks must clarify fate of debt after expropriation – IRR

Support the IRR

If you want to see a free, non-racial, and prosperous South Africa, we’re on your side.

If you believe that our country can overcome its challenges with the right policies and decisions, we’re on your side.

Join our growing movement of like-minded, freedom-loving South Africans today and help us make a real difference.

© 2023 South African Institute of Race Relations | CMS Website by Juizi