Absa’s R700 million exposure to R699 cars
Absa has revealed that its exposure to the R699 per month car saga amounts to R700 million, according to the Business Times.
This is about 2% of the bank’s vehicle loan portfolio, the bank told the paper, covering over 6,500 vehicles.
A “vast majority” of the vehicles are still in good standing, the bank said.
Absa is one of three South African banks exposed to the R699 deal run by Albert Venter’s Just Group subsidiary, Satinsky.
Absa terminated its relationship with the company in December 2013.
In June, Satinsky Group announced an abrupt end to an advertising partnership agreement with Hong Kong based advertising company Blue Lakes, which left many clients without the monthly advertising earnings they had become dependent on to finance the cars bought.
The breakdown of this business model had many angry consumers pointing fingers at the banks, claiming that the financial houses had been reckless in financing vehicles through Satinsky.
Along with Absa, Standard Bank and Nedbank’s vehicle finance arm, MFC, also financed vehicles under the deal, but have not revealed how much they have on the books with regards to Satinsky.
Consumers take action
On Thursday (7 August) the Eastern Cape High Court is set to rule on a case related to the R699 deals.
Court action is being brought by Johan Bartosch, who is leading a group of hundreds of disgruntled Satinsky consumers, looking to declare the contracts null and void in a class action suit against the banks.
The founding affidavit from Bartosch accuses the banks of “nefarious conduct”, according to Absa, relating to an alleged Ponzi scheme, as well as the alleged manipulation of income and expenses for credit scoring purposes, and reckless lending.
The court will decide whether the bid meets the conditions to be handled as a class suit.
Both Absa and Standard Bank have hit back strongly against the court action, saying that the proposed class action is ill-defined.
The banks maintain that the court action does not meet the requirements to be a class action suit, and faces a host of other problems in terms of definition, jusrisdiction, and basis.
“It is vague, over-inclusive and based on subjective factors,” Standard Bank said.
More on the R699 car scandal
Banks hit back in R699 car scheme
R699 car scheme heading to court
R699 cars deal is a scam: consumer activist
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