All the banks that have collapsed in South Africa
South Africa’s banking sector is often touted as one of the country’s strongest and most successful industries, but it is not without its notable failures.
South Africa is internationally renowned for its banking system, which is often hailed as one of the best in the world.
Despite this, South African banks are not entirely risk-free, and many have been forced to close over the last three decades.
Since 1990, 14 South African banks have been placed into curatorship, with two being placed into curatorship twice.
Recent and high-profile collapses were African Bank in 2014 and VBS Mutual Bank in 2018.
African Bank (now stylised as Africanbank) entered a curatorship in 2014 due to liquidity problems related to unsecured lending.
Following the group’s collapse, it was effectively split into a “bad bank” and “good bank”. The former took on its worst loans, along with all shareholders and all subordinated creditors.
The latter was thrown a lifeline, with the South African Reserve Bank (SARB), the Government Employees Pension Fund (GEPF) and a consortium of five other South African banks pumping R10 billion into the group to save it.
This stabilised the banking system, but shareholders ultimately lost out in a big way.
This has also been a longer-term problem for the central bank, which accounted for 50% of the bailout. This year, the SARB declared a R982 million impairment loss due to its investment in the African Bank.
Africanbank is expected to list on the Johannesburg Stock Exchange in 2025, which would require the SARB to sell its shareholding in the bank.
Africanbank has since gone on to acquire business bank Grindrod and is awaiting regulatory approval to acquire Sasfin’s Capital Equipment Finance and Commercial Property Finance businesses for R3.26 billion.
VBS, on the other hand, is unlikely to be saved, with the bank in the process of being liquidated.
Moreover, Tshifiwa Matodzi, the former VBS Mutual Bank chairman, pleaded guilty to 33 counts of corruption as part of a plea and sentencing agreement over R2 billion being stolen from depositors.
As part of his plea and sentencing agreement, the former chairman is expected to be working with authorities to unravel a massive network of corruption, with senior political figures expected to be involved.
More recently, the local unit of Pakistan-based Habib Overseas Bank was placed under curatorship after breaking several financial regulations. However, qualifying depositors will receive R100,000 from the SARB.
Information from the SARB, the Competition Commission, and a report from the University of Pretoria show what has happened to all of the banks:
| Bank | Year of Curatorship | Reason | Outcome |
| Alpha Bank | 1990 | Fraud | R150 million injected into the bank |
| Cape Investment Bank | 1991 | Fraud | SARB gave R5 million to depositors |
| Pretoria Bank | 1991 | Bad management and a dubious merger with Masterbond | SARB repaid all deposits |
| Alpha Bank | 1993 | The R150 million injection could not save the bank | Liquidated |
| Sechold Bank | 1994 | Liquidity problems due to a loss of depositor and investor confidence | Investec acquired managerial control |
| Prima Bank | 1994 | Liquidity problems due to non-performing loans | Recapitalisation, where the government guaranteed non-performing loans |
| African Bank | 1995 | Bad Management and Liquidity Problems | Recapitalisation where the government guaranteed non-performing loans |
| Community Mutual Bank | 1996 | Liquidity problems due to a very high expense-to-income ratio | Acquired by Unibank for R50 million |
| Islamic Bank | 1997 | Bad management and improper accounting, particularly around unsecured lending. Liquidated | Liquidated + SARB covered depositors up to R50,000 |
| FBC Fidelity Bank | 1999 | Bad management and liquidity problems | Partly transferred to FBC Fidelity Bank |
| Regal Treasury Bank | 2002 | Auditors rescinded their approval of the bank’s controlling company’s financial statements, which caused a run-on. | Investec Acquired Debtors Book + Liquidated |
| New Republic Bank | 2002 | Bad management and liquidity problems | Merged with FBC Fidelity Bank Limited |
| Saambou Bank | 2002 | Bad management and liquidity problems | Liquidated + R7 billion dividend to shareholders |
| African Bank | 2014 | Bad management and liquidity problems, especially around unsecured lending | SARB took 50% ownership + set for JSE listing |
| VBS | 2018 | Bad management and liquidity problems | Liquidated + under investigation |
| Ubank | 2022 | Failure to meet the minimum capital adequacy ratio | Acquired by Africanbank |
| Habib Overseas Bank | 2023 | Non-compliance with regulations, including exchange control regulations. | Liquidated (ongoing) + SARB pays depositors up to R100,000 |
Protection
Notably, South African customers are now offered some form of protection from failing banks after the SARB introduced the Corporation for Deposit Insurance (CODI), which will protect depositors in case of a bank failure – bringing South Africa in line with other G20 countries.
CODI is South Africa’s Deposit Insurance Scheme (DIS) and was created to protect qualifying bank depositors in the unlikely event of their bank failing.
The cover extends to qualifying depositors of all banks, including commercial, cooperative, mutual and foreign banks.
Qualifying depositors include non-financial businesses, charitable or nonprofit organisations, religious entities, trade unions, consumer associations, and stokvels.
Depositors are guaranteed access to up to R100,000 of their deposits in case of a bank failure.
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