BANKING
Final winding up application for the liquidation of Habib Overseas Bank scheduled for 8 August
Since it was placed under curatorship, in-depth assessments and analysis have revealed that the bank’s financial position was significantly worse than reported by its management and the bank is insolvent.
The application for the “urgent” final winding up of Habib Overseas Bank (HOB) will be heard on Tuesday, 8 August. The application was launched by the Prudential Authority (PA) and the South African Reserve Bank in the high court on 21 July, after the minister of finance decided to place Habib Overseas Bank under curatorship in March.
The curatorship decision was taken to deal with governance, compliance and operational failures. Since the curatorship, in-depth assessments and analysis have revealed that Habib Overseas Bank’s financial position was significantly worse than reported by the bank’s management and the bank is insolvent.
The curator, Craig du Plessis, has informed the PA that there is no reasonable probability that continuing the curatorship would enable the bank to pay its debts; meet its obligations and become a successful concern. He has recommended further investigation into the bank.
Habib Overseas Bank’s total assets are significantly less than its liabilities and Du Plessis believes it is “highly unlikely that HOB would be able to attract an alternative equity investor to recapitalise the bank”. He has also highlighted serious concerns regarding ’s ability to function effectively as a banking institution and has found its business model to be unsustainable.
The final winding up of the bank will allow a liquidator to preserve the bank’s assets for the benefit of its creditors and to undertake the necessary investigations into its affairs. DM
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