South Africa’s biggest banks hit with R60 billion lawsuit

South Africa’s largest banks are facing a R60 billion class action lawsuit from former homeowners claiming their properties were sold unlawfully for much less than market value.

The long-standing case, initiated in 2017, is expected to be heard in February 2026.

The court first needs to rule on whether the class can be formally certified, which is needed to allow the plaintiffs to sue collectively.

The lawsuit cites four of the country’s major banks, Absa, Nedbank, Standard Bank, and FirstRand Bank, as respondents. 

The proceedings also name the National Credit Regulator (NCR), the Minister of Justice and Constitutional Development, and the South African Human Rights Commission.

The banks are facing serious allegations of repossessing homes from account holders who fell behind on payments. 

These homes were reportedly auctioned off for exceedingly low amounts, as little as R1,000, without consideration for their actual market value.

Some of the repossessed homes were reportedly worth between R200,000 and R440,000, and in one extreme case, a R1.3 million home was sold for a fraction of its value. 

These auctions often occurred before 2017, when South African court rules still allowed homes to be sold without a reserve or minimum price.

Advocate Douglas Shaw, representing the former homeowners, described the banks’ conduct as exploitative and deeply harmful. 

“Despite the law change, banks are still selling people’s houses for 50% to 70% of their value on many occasions. And they still come after the defaulter for the balance on the bond,” he said.

Shaw argued that foreclosure has not always been a last resort, as legally required. “We’ve seen situations where the homeowner finds a new job and can start paying again, or wants to rent or subdivide the property.”

However, he said the banks go ahead and sell the home anyway. “Our banks are still incredibly under-regulated regarding their willingness to sell a person’s house when it is not a last resort.”

The big banks respond to the lawsuit

The R60 billion claim is the average estimated home equity loss experienced by families across more than 100,000 repossessions since South Africa’s Constitution was enacted in 1994. 

According to Shaw, many of these people have been homeless or destitute for more than a decade.

“This is about more than just money. No one thinks it’s acceptable to sell someone’s home for as little as R100. These banks have caused real harm. They should pay these people back,” he added.

Much of the information supporting the plaintiffs’ case was initially gathered at the request of the National Credit Regulator. 

However, Shaw noted that the NCR later tried to block public disclosure of the data, citing privacy laws like the National Credit Act and the Protection of Personal Information Act.

In response to the lawsuit, Standard Bank confirmed that it was aware of the proceedings but said it was opposing the case and emphasised that the figure of R60 billion did not appear in the court papers. 

“Our banking practices are conducted in strict accordance with all regulatory and ethical standards, and we remain committed to ensuring that all our clients are treated fairly and respectfully,” the bank said. 

“We will continue to engage fully with the legal process while maintaining our commitment to doing business the right way.”

Absa’s managing executive for Home Loans, Nondumiso Ncapai, said the bank takes extensive measures to help distressed customers avoid losing their homes. 

“Repossession and sale in execution have always been options of last resort for Absa,” Ncapai said. She added that even after legal proceedings begin, Absa allows homeowners time to resolve arrears right up to the sheriff’s final auction.

“We always advise customers to reach out if they are having difficulty so that we can help them.”

Nedbank, while unable to comment in detail, confirmed that it is defending the lawsuit.

“We are still in the early phase of the matter; class certification must be determined before the case can proceed,” the bank said. 

“Nedbank understands the impact of foreclosure and sales in execution on customers and their families and regards sales as a last resort. Our processes have always complied with the law.”

The bank also said it is committed to finding amicable solutions to avoid foreclosures and offers options such as payment arrangements and loan restructures, evaluated on a case-by-case basis.

First National Bank (FNB) also declined to comment, stating that the matter is sub judice.