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JOHANNESBURG — The last local financial institution to offer banking services to the Guptas in South Africa is now shuttering its doors in the country as the political climate gets too hot for it. Amid a probe into the Bank of Baroda’s business with the Guptas, the Indian bank has decided that the South African market doesn’t make sense for it anymore. Bank of Baroda has already been embroiled in court action to try and ditch the Guptas as clients, but this move to withdraw from South Africa completely by the end of March this year will hasten the downfall of the politically-connected Indian immigrant family. The decision to withdraw from South Africa also marks the end of a 21-year history in the country for the Indian bank, according to a statement released by Baroda today. What a way to exit the country… – Gareth van Zyl
By Vernon Wessels and Anto Antony
(Bloomberg) — The Bank of Baroda plans to exit South Africa as it faces a probe by regulators about its dealings with the politically connected Gupta family.
The state-owned Indian lender is in talks with the South African bank regulator to ensure an orderly withdrawal that won’t disadvantage any depositors, the Pretoria-based registrar said in an emailed statement on Monday. The central bank has no further comment on the matter, it said.
Bank of Baroda’s retreat comes less than a week after the company confirmed South Africa’s central bank is probing historical transactions. Bank of Baroda, which is the only lender in South Africa still offering services to companies linked to the Guptas, last year sought a court order that will allow it to close their accounts. The Gupta family, who are friends of President Jacob Zuma and in business with one of his sons, have been accused by politicians and civil society groups of using that relationship to influence state contracts and cabinet appointments. Zuma and the family deny wrongdoing.
Chief Executive Officer P.S. Jayakumar said in an interview with BloombergQuint that the lender is talking to regulators around the world to reduce its presence in countries where it doesn’t see a strong business case to rather focus on larger markets where it can better serve new customers. He declined to comment on the Gupta allegations in the interview with the Indian TV venture, saying there are many factual errors in some of the reports. A Mumbai-based spokesman for Bank of Baroda didn’t immediately respond to an email and phone call seeking comment.
The bank was said to have transgressed its own rules by being significantly exposed to one client. The lender may hold as much as 1.75 billion rand ($146 million) on behalf of trusts for mines, linked to the Guptas, and by law that money must be used for environmental rehabilitation, according to the civil society group Organisation Undoing Tax Abuse.
Public notice of Bank of Baroda’s closure posted on its website:
Closure of banking operations in South Africa
The Bank of Baroda wishes to inform valued customers and general public that in view of the Bank’s strategic plan for rationalization of the branches in international markets, the Management of the Bank has decided to cease the banking operations in South Africa territory.
The branch will stop taking new / incremental deposits and disbursing loans with effect from 1st March 2018. Further it will cease to operate and conduct the business of a Bank with effect from 31st March 2018.
Customers are requested to contact their branches by 1st March 2018 for settlement of their accounts along with latest KYC documents.
A copy of this notice is also displayed on our website www.bankofbaroda.co.za. Individual notices are being sent to depositors and borrowers separately.
The Bank of Baroda is committed to support its customers and employees through the transition and ensure least possible disruption. We apologise for any inconvenience caused and thank you for your understanding and continued support during this period.
The Bank wishes to express its gratitude to the South African Reserve Bank for its assistance and guidance for the last 21 years.
The rate of interest on all the Current Account has been reduced to 2.00 % effective from 02.02.2018.
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