Finbond

Ah yes, should have been more clear. I want to deposit over 100k with them for about 2 years.

I want to buy a home eventually but at the moment I don't have enough money. In about 2 years things will look considerable better.

Problem is I'm sitting with a large sum of money as it is right now which isn't earning much interest (Capitec 4%).
 
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Too good to be true. There has to be risk for them to be offering double what the normal banks are offering right now on fixed desposits. The fine print probably says there is a risk your money will be lost. If not its a ponzi scheme. Those rates are impossible to guarantee.
 
"The client acknowledges and agrees that Finbond Mutual Bank is entitled in its sole discretion from time to time to replace, substitute or withdraw any savings and investment account, product, facility or service." this was pulled from the terms and conditions. Obviously this is a normal process for any deposit held by an entity. Also in the terms and conditions was; "All capital and interest is guaranteed."

The high interest rate is for a limited period so obviously FinBond just want a large inflow of initial capital to fund their investments and in order to attract the large inflow it needs attractive rates. If the 10% was guaranteed indefinitely then that would be a strong indicator of a ponzi scheme but they clearly state in the T&C's that its for a limited period.

I would proceed with caution and read every bit of text available on their site as any discrepancies can easily be picked up if you are aware of the potential risks.
 
There was a recent article touting it as the next Capitec.
 
thread resurrection :)

Gnome, did you eventually invest with finbond??
Curious about experiences with these guys, as the rate is very good and I considering a possible investment with them
 
I've had a great experience with Finbond. The banker was professional and these guys are going places. They are extremely well capitalised and they have much less leverage than most other banks, including Capitec. A good, conservatively run place where you can earn double in interest.
 
thanks for the feedback risko6.
I am just wary as the old saying goes "if it seems to good to be true, it probably is".
That said though, they are registered with the FSB, and seem to be doing well.
 
The FSB is useless at enforcing standards. Many of the companies that turned out to be pyramid scheme's where audited by the FSB and given clean bills of health shortly before they unraveled. Be careful here. 3.5% above inflation guaranteed is quiet something to promise in the current market.
 
hey guys that is my previous employer, they used to do only short term loans, but they got their certification for a mutual bank.
I have some contacts if you need help
 
Cius said:
The FSB is useless at enforcing standards. Many of the companies that turned out to be pyramid scheme's where audited by the FSB and given clean bills of health shortly before they unraveled. Be careful here. 3.5% above inflation guaranteed is quiet something to promise in the current market.
Click to expand...

That is why I was thinking twice/thrice about this :)
Still not sure how risky it is compared to leaving it in a normal bank.
But why would finbond be more risky than a 'normal' bank??
Surely they would have to follow all the same rules and regulations??
 
All banks are supposed to but the small guys often don't as enforcement and prosecution is very poor in SA. Just look at J Arthur Brown and all the other recent cases. Steal millions and get fined a few hundred K if that. Its a good racket. Hence I stay away from putting money with tiny institutions. Stick to reputable companies with proper audit departments and if you want higher returns then commit to the share markets and be prepared to leave the money a little longer. Growth like that is really too good to be true.

Edit:
I decided maybe I am being unfair and looked up finbond. After reading a few articles I can now understand a little more. They where a short term loan operation until they got a banking license 2-3 years ago. Before that license they had to get money from a Dutch company at over 20% interest. With the banking license they can now get money from the public at much lower rates (the fixed rates you earn). Hence their core business is still micro loans and fixed deposits are how they raise capital to loan out. Unlike Capitec and African Bank Ltd they don't do large long term loans, they prefer very short term small loans (typical one would be R15K for 3 months). They are currently in the black and may well continue to be as short term loans have lower default rates than longer term loans. I am also guessing that shorter term loans are charged at higher rates due to extra admin costs.

Anyways, personally I still would not invest with them and after reading Hello Peter I would NEVER borrow from them but if you need short term decent returns and are willing to take the risk then I guess they are OK. One factor in their favour is that they are a listed company and the JSE has its own checks and balances especially when it comes to reporting. Banking licenses are also not easy to come by. Finbond was the first company to get one in 10 years and while the FSB is rather useless the SARB is pretty good with their audits and keeping the banks liquid. Initially I thought they where just a financial institution, not a bank. The fact that they are a bank makes them about 10 times safer just based on who monitors them (SARB instead of FSB).

Personally if I needed a fixed deposit I would still take Capitec right now as its bigger and safer but Finbond is paying the premium on Capitec right now. Whether that premium is worth the risk of a less known small player I guess is up to investors to decide.
 
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thanks for the update Cius. I have done a lot of thinking around the same areas that you have mentioned and at the end of the day it does work out to how much of a risk you are willing to accept. I also see the fact that they a bank as a huge plus, did not know the regulatory hurdles, but glad that you pointed that out as it does make it seem less risky.
 
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