GBS Mutual Bank held its annual dinner for clients and special guests from the Port Alfred area last week, celebrating 140 years of the independent bank which has built a loyal local client base.
Chairman of the board Tom Tagg gave the address at the special occasion, looking back on some of the highlights as well as the rocky periods of GBS’s history.
“What have we got to show after 140 years? We have a dedicated and happy staff, a growing and most loyal client base, an increasing number of NGOs, educational and other institutions who over the years have relied on our substantial financial support, and finally a modern bank with fresh ideas to carry us into the future,” Tagg said.
“None of this of course would have been possible without the steady growth in profitability and assets over the years.”
At the time the GBS converted to a mutual bank in 1994, its assets stood at R167-million. These increased to R500-million by 2006, then a billion by 2014, and currently stand at just over R1.2-billion.
GBS’s assets currently stand at just over R1.2-billion
“During this period profitability also rose steadily from around the R1.5-million mark to our latest record profits this year of R10-million. In the meantime reserves increased from R12-milion to R100-million,” Tagg said.
But he reminded the audience that the bank’s journey had not been a fairy tale of plain sailing.
“We have hit many troughs along the route, some more severe than others, but have always managed to avoid a disastrous wipe-out.”
Tagg said GBS’s history is broadly spit in two, the first part – about 115 years – tied closely to the building society movement, and the more recent period tied to the banking sector as a whole.
He said prior to the early 1990s the building society movement was basically a government tool to provide finance for housing. The government controlled home mortgage rates through setting the rates on savings products.
“However, this cosy way of doing business started to change in the mid-’80s when the banks, for capital reasons, entered the home loan market making it far more competitive which obviously benefited the consumer. At the same time the government removed tax incentives on building society investments,” Tagg said.
He mentioned two periods in which the bank experienced troubled waters. The first was in the 1970s, when GBS expanded into Bloemfontein and ended up financing housing developments at the lower end of the market.
“A near disastrous move which took a long time to mend,” he said.
A little while later, when the bank opened a Durban branch, moving away from traditional lending areas, they discovered they were being scammed by an estate agent and legal practice.
“We smartly shut down our lending and closed our Durban branch before it all ended in tears.”
Tagg felt Stone’s biggest legacy is the culture of care and fairness he instilled into the ethos of the bank
Over a period of 25 years (1983 to 2008), past chairman Chris Stone steered the bank through the Bloemfontein crisis, oversaw the transition to a mutual bank, the introduction of asset-based finance, and deftly managed the GBS through two banking crises which saw the demise of Fidbank, Saambou, Regal Treasury and BOE and the closure of a host of other small banks.
Despite severe pressure from the Reserve Bank for GBS to join up with another financial institution, they weathered the storm, remained independent, grew and prospered.
But Tagg felt Stone’s biggest legacy is the culture of care and fairness he instilled into the ethos of the bank.
“His overarching principle was doing the right thing even if it was not the most profitable. This philosophy kept many defaulting debtors in their homes.”
At the dinner guests enjoyed a feast catered by Naartjie and Cheryl Moss, of a butternut soup starter, a main course of roast lamb served with mint jelly and gravy, chicken and mushroom phyllo, crispy potato wedges, pumpkin fritters in a sweet sauce and green beans tossed in olive oil with toasted slithered almonds. Dessert was a brandy snap basket with vanilla ice cream and caramel sauce.