African Bank Moves Closer to Recovery as It Requests New License
Oct. 29 (Bloomberg) — African Bank Investments Ltd., the South African lender that collapsed in August, is a step closer to recovery after requesting a new license to operate from the central bank.
“The banking license application went in yesterday along with our base-business plan,” Tom Winterboer, administrator of the failed lender, said in an interview in Johannesburg today. “Once the banking license is approved and we have approvals from the National Credit Regulator and the Financial Services Board, then we’ll apply for the listing. We’re still targeting the end of the first quarter.”
Abil, as it’s known, collapsed in August after investors withdrew funding amid increasing losses and rising bad debts. The South African Reserve Bank stepped in on Aug. 10, appointing Winterboer and announcing a plan to split Abil’s bad loans from its viable assets. Equity and debt investors will have the chance to participate in the good bank’s initial public offering in Johannesburg next year.
Abil is collecting about 2.5 billion rand ($230 million) a month from borrowers and has loaned more than 650 million rand to customers in October, Winterboer said. On Aug. 6, Abil estimated record losses of 7.6 billion rand for its full-year ending September. The results “won’t be better” than those projections, Winterboer said.
Pay Increase
About 200 staff have resigned since Abil’s bailout, leaving the bank with 5,300 employees, he said. The administrative team negotiated with labor unions wage increases of about 7 percent in the new fiscal year for employees. Job cuts aren’t planned, according to Winterboer.
Leon Kirkinis, the founder and former chief executive officer of Abil who resigned on Aug. 6, has been into the bank’s offices to share his views, Winterboer said, without giving details.
A new CEO will be found for the good bank once directors have been appointed, the curator said. “We’ve got a short list of directors for the new bank and have agreed on a number of names with the Reserve Bank. We’re looking for people with retail banking experience, financial services experience and also in legal, IT, and actuarial.”
To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net John Viljoen, Cindy Roberts
