
<p>JOHANNESBURG (Reuters) &#8211; South Africa’s central bank has issued a 3.45 billion rand ($200 million) guarantee to bail out the Corporation for Public Deposits (CPD), a government investment arm hit by surging defaults at state agricultural lender Land Bank.</p>



<p>The issue adds a further strain on state finances as the government props up its main power utility and airline, which were already struggling before the coronavirus crisis, and now faces rising defaults at the agricultural lender.</p>



<p>CPD, which purchased various debt instruments from Land Bank, said overall it suffered a 2.8 billion rand loss in the 2019/20 financial year, necessitating the central bank bailout.</p>



<p>Deputy governor of the Reserve Bank (SARB) and chairwoman of the CPD, Fundi Tshazibana, told Reuters in an interview this week the guarantee was to cover the investment arm’s losses in the 2019/20 period and replenish reserves, which had dwindled to zero.</p>



<p>“We had to provision for what we will not be able to recover from the Land Bank. That was one of the reasons why we (central bank) had to provide the guarantee,” said Tshazibana.</p>



<p>“Because of the Land Bank default, we were running at a loss and we weren’t going to be a going concern&#8230;That would have been of real concern to depositors,” she added.</p>



<p>In April the Land Bank, the country’s largest agricultural-focussed lender, defaulted on 50 billion rand of loans repayments and in June it failed to make interest payments of nearly 120 million rand.</p>



<p>On Friday the Land Bank told Reuters it had not made interest payments of around 320 million rand on debt which was due end June.</p>



<p>The South African Treasury guarantees around 5.7 billion of the Land Bank’s debt and last week granted the firm 3 billion rand of emergency equity funding.</p>


South_African_Reserve_Bank_Pretoria_1989

Land Bank default forces S.Africa’s central bank into $200 mln bailout of state investment arm

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<p>The Land Bank&#8217;s debt has become more expensive with Moody’s downgrading the bank to junk status. The credit ratings agency said this was due to the unlikeness of the South African government being able to support the Development Finance Institution in time of need. Joining CNBC Africa to discuss what this means is Sydney Soundy, Acting Chief Executive Officer of the Land Bank.</p>


Downgrade material for Land Bank

Downgrade material for Land Bank, to consult lenders

<p>Land Bank CEO Tshokolo Nchocho has been appointed the new CEO of the Industrial Development Corporation, he replaces Geoffrey Qhena, who was at the helm for 13 years.</p>
<p>Nchocho has both academic qualifications and extensive experience in development finance and banking. He holds a B Com from the University of the North, a Master of Business Leadership from UNISA and a Masters degree in Development Finance from the University of London; and an Advanced Management Programme from the Harvard Business School. His experience in development finance and banking stretches over a 28-year period, including a lengthy period at the Development Bank of Southern Africa and as the CEO of the Land Bank.</p>
<p>The board is yet to finalise Nchocho’s commencement date at the IDC.</p>
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<p>Under Qhena&#8217;s watch, investment in green energy has increased significantly and the IDC introduced its black industrialists programme.</p>
<p>In the past five years the IDC investment commitments totalled R72 billion, an increase of 30% compared to the previous corresponding period. These investments in turn attracted a large level of private sector investments, bringing the investment level to R176 billion and creating or saving 105 822 direct jobs.</p>


IDC appoints new CEO

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<p>In its financial full year results, the Land Bank says that its total gross loan book grew by R4.3 billion of which R2.4 billion was for development loans.</p>


Land Bank

Land Bank default forces S.Africa’s central bank into $200 mln bailout of state investment arm

Downgrade material for Land Bank, to consult lenders

IDC appoints new CEO

Land Bank CEO TP Nchocho on earnings, Western Cape drought

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Land Bank

Land Bank default forces S.Africa’s central bank into $200 mln bailout of state investment arm

Downgrade material for Land Bank, to consult lenders

IDC appoints new CEO

Land Bank CEO TP Nchocho on earnings, Western Cape drought

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