ABSA ditches African Bank investments


Absa Bank has removed all African Bank Investments Limited investments (Abil) from its Absa Money Market Fund, it said on Friday. "This will provide certainty and confidence to investors in the Absa Money Market Fund as the fund will only have exposure to the five large banks and the government," the bank said in a statement.

"Through this clarity we will also ensure that all Absa Money Market Fund investors are treated in a consistent manner going forward."

The Times reported on Friday that investments in the bank's money market fund were reduced by 0.3 percent following the massive losses in African Bank, which saw its share price plummet to a low of 28 cents on Friday from a high of R30 a share in March 2012, On Monday, the statements of Absa money market account-holders had a line that reportedly read "adjustement [sic] debit" and a rand figure with a negative symbol in front of it.

Several account-holders reported noticing less money in their accounts. The SA Reserve Bank (SARB) announced on Sunday that it had placed African Bank under curatorship. A consortium involving major banks had committed to underwrite a R10 billion capital raising and would engage with shareholders and other participants, SARB governor Gill Marcus said at the time.

African Bank's shares plummeted last week after it warned of massive losses and said it needed about R8.5bn in new capital. Marcus said African Bank served 3.2 million people. Absa said the SARB's announcement brought certainty to the industry.

"Through our action today [Friday], Absa provides further certainty for all investors in the Absa Money Market Fund."


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