Absa wants taxpayers to bail out their BEE deals

While times were good and cash and credit aplenty, SA banks under pressure from the ANC regime and brown-nose white executives rushed money to BEE recipients, all black obviously, comfortable in the knowledge that such loans were secure based on a company's share value. Many deals involved the purchase of shares using 100% bank loans, no money down. Such was the haste to please their ANC masters that many companies and banks erred on higher share or income expectations.

However, nobody anticipated the biggest global economic collapse in 80 years. Since the credit implosion, many BEE assets/ shares are worth shite and so obviously, many a BEE deal is collapsing due to the inability of many companies and BEE recipients to repay loans. I know, all together now...ag, shame.

Hmm, says Absa, WE took a risk by promoting these racist BEE deals to please our ANC masters and now that they've gone sour, we need the regime to bail us out - with taxpayer's money no less! That's right, we'll ask the bottomless taxcow to guarantee the bad BEE loans we made and/or use tax money to buy back bad assets.

Well, in jou moer Mr Bank CEO.

You ran the risk, you kissed ANC ass, now suck it up and take the losses. No new Merc this year. Don't expect taxpayers, of which most are white and who were EXCLUDED from BEE deals in the first place to bail out your ass now.

South Africa's push to sell equity stakes in mining firms to black investors to redress their exclusion under apartheid has been hit by the financial crisis and needs help, a top banking official said on Wednesday.

Corporate deals under the programme, known as Black Economic Empowerment (BEE), have been adversely affected by the credit crunch, falling metal and stock prices and some of the assets could be lost unless the government, the mining industry and the financial institutions step in to save the day.

"Everyone should get around the table and it needs to be done quickly," Cliff Zephyrine, head of empowerment department at Absa Capital, said at a mining conference.

Many deals under BEE are complex and are funded by companies selling shares. Black investors usually repay the loans with dividends, and the shares act as collateral.

But with markets collapsing, such deals are under threat.

"The BEE party is at risk of losing all the wealth that has been created. The banks (will) end up owning assets that may or may not be sold and the government is in an election year with empowerment being a political priority," Zephyrine said. (nice one Z, using the election to put pressure on the ANC)

Under BEE, South African mining firms are required to sell 15 percent of their assets to black investors by 2009 and 26 percent by 2014 to bring black people into mainstream economy.

Zephyrine said some well-capitalised BEE companies could move in to replace some weaker entities or private investors who could assist the BEE parties with flexible capital. (could, would, should ..but won't. Tough)

South Africa's Finance Minister Trevor Manuel told a pre-budget briefing that bringing black people into ownership was a constitutional imperative, but a funding model based on equity participation held huge risks.

"There are a number of these transactions that will be exceedingly hard to see profitability in our lifetime, because they were premised on the notion that the share price would climb very quickly... Even deals offered at a pretty deep discount, they are finding themselves under water."

"Is it rational at a time like this that we go to the market, and capital markets are tight, and borrow loads of money that we can dole out? How do you deal with it? I don't know how you deal with it," said Manuel.