NEDBANK Group said a claim by Transnet and the SIU that it had profited by R2.74 billion in interest rate swap transactions between the utility and itself in 2015 and 2016 was incorrect, and the figure was much less.
Its management also said on Friday that they were satisfied internal governance procedures were followed in the transactions. The legal action arose after mediation between the parties had failed.
Transnet and the Special Investigating Unit (SIU) announced on Friday they had jointly instituted proceedings against Nedbank out of the Johannesburg High Court to set aside the interest rate swap transactions which took place in 2015 and 2016, and on which they asserted Nedbank had profited by more than R2.3bn.
In these transactions, Nedbank was involved in restructuring the interest on the debt that Transnet used to fund its freight rail and port operations, while the bank would receive fees for doing so.
Nedbank already faces a similar complaint from the Airports Company South Africa, which had referred the bank to the SIU over its role in interest rate swap deals.
“Nedbank will strongly defend the litigation against it and will pursue its counter claims against Transnet and others,” the bank said.
“The sales margin earned by Nedbank in respect of the swaps was market related and amounted to less than R43 million. The swaps were commercially sound and the return on equity earned by Nedbank was fair, reasonable and appropriate at 15.5% over the life of the transactions,” the lender said in a statement.
It said its management was satisfied that “there is no evidence of any Nedbank staff dishonesty, corruption or collusion”.
The transactions had featured in the report of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector, and formed part of a greater scheme to misappropriate and divert public funds from Transnet to Gupta-linked entities.
“Transnet and the SIU are of the view that the interest rate swaps are void and unenforceable under the Public Finance Management Act, alternatively contravene Section 217 of the Constitution and are contrary to public policy,” Transnet and the SIU said in a statement.
“There is sufficient basis for the sought relief and Nedbank must account for its involvement and conduct in the swap transactions. Transnet and the SIU collaborated closely in preparation of the court proceedings, and this included the SIU’s uncovering of evidence critical to the case,” they said.
Nedbank’s share price gained 1.33% to R268.96 on Friday on the JSE, higher than the R235.34 it traded at one year ago.
The bank recently said it expected to produce slightly lower headline earnings growth in the first half of its financial year to June 30, when compared to its second half to December 31, 2024, primarily as a result of slow revenue growth, as well as the impacts of the first half of 2023 results that had benefited from foreign exchange related gains.
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