Banks - Mutual Banks - FINBONDJOHANNESBURG ( 21 Jan 2013 ) – South Africa’s newest bank pays up to 10 % on Deposits. This generous return has helped it to attract R85m in deposits since it opened its doors, a mere four months ago. Website : www.finbondmutualbank.co.za
What is a Mutual Bank ?
A “Mutual Bank” also known as a “Mutual Savings Bank” is a bank which is operated on a mutual bank model, with the specific goal of encouraging savings and providing benefits to its depositors. When someone deposits funds in a “Mutual Bank”, she or he essentially buys an ownership stake in the bank and are entitled to vote at shareholder and member meetings.
JOHANNESBURG ( 21 Jan 2013 ) – South Africa’s newest bank pays up to 10% on deposits. This generous return has helped it to attract R85m in deposits since it opened its doors, a mere four months ago.
Finbond is a Micro-lender with 170 branches nationwide. It offers small, short-term loans of between R100 to R7 000. The deposits it accepts via its Mutual Bank are used to fund the Micro-loan Business.
Finbond Mutual Bank is one of only three Mutual Banks in the country. The other two are: GBS Mutual Bank and VBS Mutual Bank. These are old institutions; GBS was established in 1877 and VBS in 1982. A mutual bank is owned by its depositors, and they are entitled to vote at shareholder meetings.
A Mutual Bank does not require as much capital as an ordinary bank in order to obtain a licence. But Finbond CEO Willie van Aardt insists that in all other aspects, the application process is as onerous as it would be for an ordinary bank.
Finbond’s interest rates are significantly more generous than other banks. For example, Capitec, which has long been known for above-average interest rates, pays 8.5% on a R100 000 fixed-term deposit of 49-60 months. An equivalent deposit with one of the big-four banks would not earn more than 7%. As at 21 Jan 2013.
Finbond pays depositors between 8.75% and 10% a year, depending on the term of the deposit. Fixed-term deposits of 6-11 months earn interest of 8.75%. Those of 49-60 months earn 10%.
Galileo Capital CEO Theo Vorster says a few of his clients have asked him about Finbond’s savings products. Vorster notes that the 10% paid by Finbond is three percentage points higher than the return offered by the equivalent government retail bond. “Investors need to ask themselves whether the extra three percentage points are adequate compensation for the extra risk,” says Vorster.