LETTER: Banks must take some responsibility
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I read with concern the article on banks, "Team Blue Wins, For Now" (Money & Investing, August 27-September 2) ( Two aspects stand out for me, and are seemingly overlooked or taken for granted.
The first is the banks’ management of loans. Banks provide astronomical amounts of money to fund bad debts — Standard Bank R11.3bn and Absa R14.7bn, according to your article. Put aside the risk and accounting conservancy, and all the other clichés used to justify this, and consider what is actually happening.
Surely risk associated with loans should be individually, and much more diligently, considered before loans are paid to borrowers, taking into account appropriate safeguards, such as collateral and security. Banks even categorise loans into three stages to help assess the adequacy of their impairment provisions. Interesting information, but it is actually too little too late.
What seems to be taken for granted is that banks have effectively evolved a scheme to donate money to errant borrowers with shareholders’ funds, and to replenish it with bank charges at their customers’ expense.
Second, defaulting on debt repayment seems to be quite common by individuals who enjoy good lifestyles at the expense of others. The SA Revenue Service, service providers and banks are prime examples of their victims.
One cannot but wonder whether many so-called borrowers accept loans from banks with no intention of repaying them at all.
To some degree, banks must accept responsibility for this, as they continually aggressively advance money and subsequently write it off to keep their scheme revolving.
Ian Juszkiewicz
Morningside
The FM welcomes concise letters from readers. They can be sent to fmmail@fm.co.za (mailto:fmmail@fm.co.za)
The first is the banks’ management of loans. Banks provide astronomical amounts of money to fund bad debts — Standard Bank R11.3bn and Absa R14.7bn, according to your article. Put aside the risk and accounting conservancy, and all the other clichés used to justify this, and consider what is actually happening.
Surely risk associated with loans should be individually, and much more diligently, considered before loans are paid to borrowers, taking into account appropriate safeguards, such as collateral and security. Banks even categorise loans into three stages to help assess the adequacy of their impairment provisions. Interesting information, but it is actually too little too late.
What seems to be taken for granted is that banks have effectively evolved a scheme to donate money to errant borrowers with shareholders’ funds, and to replenish it with bank charges at their customers’ expense.
Second, defaulting on debt repayment seems to be quite common by individuals who enjoy good lifestyles at the expense of others. The SA Revenue Service, service providers and banks are prime examples of their victims.
One cannot but wonder whether many so-called borrowers accept loans from banks with no intention of repaying them at all.
To some degree, banks must accept responsibility for this, as they continually aggressively advance money and subsequently write it off to keep their scheme revolving.
Ian Juszkiewicz
Morningside
The FM welcomes concise letters from readers. They can be sent to fmmail@fm.co.za (mailto:fmmail@fm.co.za)