The Reserve Bank has taken control of Ditsobotla Primary Savings and Credit Co-operative Bank (DCB) and will pay qualifying depositors after the lender failed to meet financial and regulatory requirements.
DCB, serving parts of North West, was placed in resolution by the finance ministry on August 1 — a formal process that allows regulators to manage a distressed bank.
The intervention comes after persistent financial losses at the bank, weak governance and noncompliance with prudential rules, despite repeated warnings from the Reserve Bank’s Prudential Authority (PA).
In May, DCB reported it had 1,452 members and total assets of R8.30m. Those figures have not yet been audited.
A resolution practitioner has been appointed to take control of DCB’s operations. In line with established resolution procedures, all member accounts at DCB have been temporarily frozen to allow for a full assessment of the bank’s financial position.
As a registered bank, DCB is a member of the Corporation for Deposit Insurance (CODI), a subsidiary of the Reserve Bank established to ensure that qualifying depositors have access to their covered deposits should their bank collapse.
The CODI will reimburse DCB depositors by up to R100,000, covering the principal amount and any accrued interest in qualifying savings products. That includes savings accounts held by individuals and stokvels.
Until June 1 2023 a failed bank was placed in curatorship in terms of the Banks Act under the supervision of the PA.
The Financial Sector Laws Amendment Act 23 of 2021 repealed the curatorship provisions, and bank failures since then have been managed through resolution, led by the Reserve Bank in accordance with the Financial Sector Regulation Act.
According to the Reserve Bank “all members who have received loans from DCB must continue to repay them, as these obligations remain legally binding”.
“Failure to make repayments on the money owed may result in penalties and other sanctions,” it said in a statement.
To further support an orderly resolution, the Bank has temporarily suspended all of DCB’s obligations to non-member creditors. The measure will remain in place until its financial condition has been thoroughly evaluated.
A co-operative bank is a member-owned financial institution that provides banking services to its members, who typically share a common bond, such as living in the same geographical region, belonging to the same association, or working for the same employer.
DCB was formed through the consolidation of three savings and credit co-operatives — Aganang, Ikageng and Itireleng — originally established by employees of Alpha Cement, the Lichtenburg Municipality and Lafarge Cement.
The bank was officially registered with the Reserve Bank on March 1 2014.
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