African Bank placed under curatorship

By on August 14, 2014

Despite African Bank being placed under curatorship, the banks doors remain open for business writes Krysia Gaweda.

Gill Marcus, Governor of the South African Reserve Bank (SARB), announced that a decision had been made, in conjunction with the Minister of Finance, Nhlanhla Musa Nene to place African Bank Limited under curatorship and to appoint Tom Winterboer as the Curator. The curatorship only applies to African Bank Limited, and not the parent company, African Bank Investments Limited (ABIL).

Winterboer is the financial services industry leader for Africa and a member of the global financial services leadership team at PricewaterhouseCoopers (PwC). A team of experts, including Peter Spratt and David Gard of PwC London, will assist Winterboer as the African Bank Curator. Winterboer will announce other team members at a later stage.

“Our role is to best promote the interest of the creditors and banking sector as a whole and to maintain investor confidence in South Africa,” said Winterboer.

“We confirm that African Bank is open for business and that our retail customers’ money is safe. Employees have already been informed that the new measures will in no immediate way negatively impact on their jobs, their salaries will be paid and their contracts will be honoured in accordance with South Africa’s labour laws.

The curatorship is a protection method allowing the Curator, who acts under the supervision of the Registrar, the power to develop and implement a plan to ensure that African Bank has a secure future as a lending institution with a transformed business model.

The curatorship and resolution process will:

  • Ensure that the regulator operations and collection of African Bank continue effectively and efficiently;
  • Identify performing loans and assets to be maintained in a good bank; and
  • Involve the purchase by the Reserve Bank of a substantial portion of the non- and under-performing assets and other high-risk loans from African Bank in order to separate them from the good bank and also as a first step towards resolution of the challenges.

In addition, Marcus announced a number of measures, which have been in planning over the last several weeks, to rehabilitate and reconfigure the business model of African Bank. These measures included recapitalising the bank by raising R10 billion, underwritten by a consortium made up of the country’s leading banks and the Public Investment Corporation (PIC).

Winterboer continued to state that all 511 branches nationwide are open, as well as the bank’s 1000-seater call-centre. Winterboer emphasised that a recovery process is under way to turn African Bank into a high quality and profitable institution once more and this can be achieved through, amongst other things, African Bank’s loyal customers and employees.

“Our task at hand is to ensure the smooth and efficient running of African Bank and to ensure that the regular operations and collections continue effectively, while implementing the plan in a respectful and dignified manner.”

“There is much work to be done and it is understandable that our customers and employees have many questions as to the operational status of African Bank. To this end we would like to confirm that the bank is open for business”, said Winterboer.

African Bank’s shares dropped last week after it warned of massive losses and said it needed about R8.5 billion in new capital.

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