African Bank placed under curatorship – Gill Marcus

2014-08-10 17:02

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A raft of support measures has been unleashed in a bid to protect embattled African Bank's depositors, shareholders, creditors and clients, Reserve Bank Governor Gill Marcus has said.

"The first important measure has been the conclusion reached by the Registrar of Banks and the decision by the minister of finance to place African Bank under curatorship with effect from 4pm today," Marcus told reporters at the SA Reserve Bank in Pretoria.

"African Bank Limited's board has, after due consideration, advised the registrar that it does not oppose curatorship and has taken the appropriate resolutions to facilitate the process."

Tom Winterboer was appointed as the curator.

"Tom Winterboer is the financial services industry leader for Africa and a member of the global financial services leadership team at PwC (PriceWaterhouseCoopers)," said Marcus.

He would be assisted by a team of experts including Peter Spratt and David Gard of PwC London. Other team members would be announced by Winterboer.

"I want to emphasise that African Bank continues to operate during the curatorship and that Mr Winterboer will make decisions regarding the continued granting of loans and sound banking activities generally," said Marcus.

She said retail depositors represented less than one percent of African Bank's creditors.

"We are therefore able to make an unequivocal commitment to all existing retail depositors that their money is safe, and that they can continue with African Bank without fear that their deposits will be frozen or lost.

"They will have full access to their money in the ordinary course of business," she said.

The SARB governor said the curatorship was a protection procedure which gives the apex bank the legal means to create the "necessary space to implement a resolution plan capable of ensuring that the business of African Bank gains a secure perspective" as a lending institution with a transformed business model.

Among many African Bank Investment Limited's (Abil) woes, Marcus said in a six month period to March 2014, the institution posted a headline loss of R3,1 billion.

"They assured the market that the book written after June 2013 was significantly better and forecast that they would return to profitably in the second half of the year," she said.

Abil's trading statement for the third quarter released on August 6 2014 was markedly worse than what was expected, with an estimated headline loss for the full year to September 2014 financial year of R6, 4 million.

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

Marcus said African Bank serves 3,2 million people.

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