Abstract:
The 2008 Global Financial Crisis has revealed the importance of maintaining financial stability. A big threat to the maintenance of financial stability is however bank failure. Especially if a bank is systemically important due to its size and interconnectedness it may propagate contagion and bank runs and trigger the collapse of a whole financial system. It is therefore pertinent that the issue of bank failures be addressed, preferably by extending assistance to such a failing bank where appropriate. In South Africa bank rescue is currently facilitated in terms of section 69 of the Banks Act 94 of 1990 that provides for the Minister of Finance, on recommendation by the Registrar of Banks, to appoint a curator for a bank that is unable to pay its debts as they become due. The process of curatorship is however deficient when it comes to dealing with banks that are failing but of which some part may be rescued. This deficiency was revealed during the rescue of African bank when some innovative amendments had to be effected urgently to the Banks Act by means of the Banks Amendment Act 3 of 2015. This dissertation explores the concept of curatorship and how the curatorship process and powers of the curator was changed as a result of the problems posed by the collapse of African Bank. It looks into the restructuring of the bank and also discusses the complimentary process of the investigation into the affairs of a failing bank as set out in section 69A of the Banks Act. The dissertation further looks into international developments in the context of the prevention and mitigation of bank failures. Spesific regard is had to the Financial Stability Board's Key Attributes of Effective Resolution Regimes for Financial Institutions, pointing out that the rescue of African Bank actually comprised of bank resolution rather than curatorship in the strict sense.