African Bank Delays IPO in Favor of Quickly Creating New Lender

Dec. 10 (Bloomberg) — African Bank Investments Ltd. will delay an initial public offering of the failed bank’s viable assets to more quickly create a new operational lender.

“We want to have a good bank to operate as soon as possible, so we have decoupled that from the listing,” David Gard, a director at PricewaterhouseCoopers LLP who is working with African Bank’s administrator, told reporters in Johannesburg today. The good bank may initially operate as a private bank, he said.

Abil, as it’s known, collapsed in August and an IPO was planned by next March. To create the new legal entity, the administrator of Abil, Tom Winterboer, needs to appoint directors, obtain a banking license, ensure additional funding from the central bank and change South African law governing the rescue of failed lenders. The faster a new bank is created, the more certainty investors may gain of recouping losses.

While Abil had just 1 million rand ($87,100) of operating cash when it failed, it is now collecting “well over” 2 billion rand a month and loan disbursements are rising, Winterboer said. The operations have stabilized and the restructuring should be completed by early next year, he said.

Extra funding for the good bank will come from the South African Reserve Bank, according to Gard, which will be given senior status as a creditor. Abil’s bonds, which have been suspended since Aug. 11, will have their maturity periods lengthened by two years and debt holders will have the option to exchange these for debt to be rated and traded by the new lender the administrator is creating, he said.

To contact the reporter on this story: Renee Bonorchis in Johannesburg at [e-mail] To contact the editors responsible for this story: Dale Crofts at [e-mail] John Viljoen, Steve Bailey