THERE is doubt whether the troubled SME Bank will recover close to N$200 million worth of loans given to companies and individuals in Namibia.
The SME Bank is currently struggling to recover another N$200 million which was invested with South African financial entities last year by the executive that has since been dismissed.
Although police Inspector General Sebastian Ndeitunga said investigations into how the N$200 million disappeared from the SME Bank to South Africa is at an advanced stage, the Bank of Namibia said they cannot trace the money.
Industrialisation minister Immanuel Ngatjizeko said in parliament last month that the value of the bank’s loan book was N$620 million.
It now turns out, according to the latest document obtained by , that recovering the N$200 million of the N$620 million is in doubt because of non-performing loans.
The Bank of Namibia said a transaction becomes a non-performing loan when the borrower fails to pay for 90 days or more.
The documents show that as of 31 March 2017, the SME Bank had N$100 million sub-standard loans, N$55 million doubtful loans and N$32 million in loans that were considered lost.
According to the documents, 69 individuals and companies benefited from the sub-standard loans worth N$100 million, of which 31 are construction firms.
Last year, the Construction Industries Federation of Namibia said some of its members were owed N$1 billion by the government.
Laws regulating the Bank of Namibia define a sub-standard loan as a transaction that is not adequately protected by sound paying capacity.
“The primary source(s) of repayment is not sufficient to service the debt, and the bank must look to secondary sources such as collateral, the sale of fixed assets, refinancing, or additional capital injections for repayment,” the Banking Institutions Act says.
Furthermore, the papers show that there is doubt whether 74 individuals and companies who received N$55 million will repay the loans. Of the 74 doubtful loan recipients, 34 are construction firms.
When a loan is doubtful, it means the transaction is likely to be lost because the banking institution did not demand enough security in case of the debtor failing to pay.
Documents also show that loans valued at N$32 million which were extended to 44 individuals and companies are considered as losses. Of these 44 lost loans, 22 were to construction firms.
These are loans, or other assets, considered uncollectable, or of such little value that their continuance as a bankable asset is not warranted.
understands that the SME Bank’s recovery has been poor over the years, to such an extent that those failing to pay were left untouched.
Sources said the Bank of Namibia-appointed management at the SME Bank wants to recover at least N$60 million in the next two months, yet the documents show that they have only issued a repossession order to one company.
A source admitted that one of the reasons for the poor loan payments is that government has not paid some of the contractors who took loans from the SME Bank.
Acting SME Bank chief executive Benastus Herunga yesterday declined to comment on the questions about their loan book because of confidentiality.
Herunga, however, could neither confirm nor deny the figures included in this story.
Sources told that the next two weeks are crucial for the troubled bank, and that it might be forced to ask government for a bailout to stay afloat.
“For now, they want to recover as much money as they can before they approach government to ask for money,” the source said.
Recovering the money includes repossessing property and claiming from insurance companies in the case of those debtors who put up their policies as security.
reported yesterday that Herunga had opened a criminal case against the three dismissed SME Bank executives to recover the N$200 million invested in South Africa.
The three, former SME Bank CEO Tawanda Mumvuma, finance manager Joseph Banda and treasury manager Alec Gore, are to be held accountable for the losses. The three fled the country in February this year, just before the Bank of Namibia took over the SME Bank.
Ndeitunga also confirmed yesterday that there was a criminal case against the dismissed executives.
“The investigation in this case continues, and it is at an advanced stage,” he said, without disclosing the name of the official who opened the case.
, however, understands that the Bank of Namibia opened the case against the three former executives.
