Banks extended loans not based on their evaluations of individual operations or projects, but based on their evaluations of individual borrower firms. In determining the eligibility of corporate borrowers, banks were less interested in diligently assessing the state of cash flow than in gauging the extent of the real estate holdings that could be offered as collateral.
It is not surprising then that they have undertaken a medium term note programme under which they can issue paper to a total tune of R6-billion. Actually the last bond was issued under this programme. Non-residents are active participants in the South African capital markets, accounting for around 20 per cent of daily turnover on both the JSE and Besa.