‘There’s no truth in that’: Wesbank CEO denies charging black clients higher interest rates

WesBank CEO Ghana Msibi has denied allegations that it charges higher interest rates for black clients compared to its white clients.

The vehicle financier was accused of this by a whistle-blower said to be a former employee.

Speaking to The Citizen, Msibi said the allegations had no merit.

“There is no truth in that,” he said, adding that the bank does not consider race, gender or age when determining pricing or approval rate.

“We sit in a very in a very unfortunate situation where unsubstantiated allegations, which in my humble opinion, are factually incorrect and have not been tested with us – may have caused us irreparable harm with our customers,” Msibi said.

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Tip-off

Financial investigator Emerald van Zyl told Newzroom Afrika that he received the tip-off in 2019.

He then put out a call on X (formerly Twitter), asking WesBank clients to provide copies of their contracts to aid his investigation.

Van Zyl said he received 160 contracts from black clients and 50 from white clients.

“I was totally shocked to see that black people are paying up to 19% interest rate and whites approximately average 11.25%. That is a massive 8.75% more,” he explained.

READ MORE: Wesbank accused of charging its black clients more on interest

‘We don’t know the whistle-blower’

Msibi said that WesBank had no idea who the whistle-blower is.

“A third party makes allegations on the back of a source who is an alleged ex-employee whom we don’t know. However, when we listen to what this alleged ex-employee purports to be our processes, they are riddled with factual incorrectness,” he said.

According to the CEO, Van Zyl has not engaged with the bank. Neither has the financial investigator forwarded copies of the inspected contracts to the bank to verify.

“We haven’t seen any of those contracts,” Msibi said.

“If we are presented with the contracts, it at least gives us an opportunity to assess a set of variables that the third-party [investigator] has looked at, so that we can understand why those outcomes would have been,” he explained.

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‘Blind to race’

Asked about the possibility of inherent racial bias in the bank’s algorithm, Msibi said their risk-assessment criteria didn’t include race.

“We charge every customer based on the merits of their portfolio. We don’t look at a portfolio average and then infer a rate because of a racial group – we assess your individual criteria,” he said.

Msibi further explained that the bank determined interest rate based on credit risk validated through the credit bureau, and an asset risk analysis – using a model rate.

“The model rate is blind to race.

“If you have two individuals of the same credit risk portfolio [with] the same asset structure, the model rate will be the same… regardless of race, gender or age.

“You can have two people of the same race having different rates because the deal structures are different. That is not a function of race – that’s a function of the deal structure,” Msibi explained.

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Zero infiltration

WesBank said it conducted a system inspection following the allegations to check if there may be issues with their processes. It said none were detected.

“There has been no infiltration of the system to then prejudice [clients] based on race,” Msibi added.

“[Looking] at our processes and governance, no way does race determine rate or approval rate.”

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Plea to customers

Msibi urged customers who may feel aggrieved to approach the bank with their concerns.

“Engage us, let us speak directly to you because it’s a case by case scenario,” he said.

“Even customers who’ve gone to the financial investigator, we open the doors to them as well.”