African Bank enters into R8 billion support arrangement with shareholders

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An African Bank branch in Hatfield, Pretoria.
An African Bank branch in Hatfield, Pretoria.
Theana Breugem

African bank says it has entered into significant support and assistance arrangements with its shareholders as it gears up to re-enter South African wholesale funding market.    

“These support agreements will enable the Bank to formally re-enter the South African wholesale funding market at market related rates,” said its Chief Financial Officer Gustav Raubenheimer in a statement on Monday morning.  

The "new" African Bank commenced operations in April 2016 following the restructuring of its predecessor of the same name, which collapsed in 2014 and had to be bailed out. 

Its shareholders include South African Reserve Bank, the Government Employees Pension Fund, as well as South Africa's major banks. 

On Monday African Bank announced its shareholders have undertaken to provide it with support facilities up to a maximum cumulative amount of R8 billion if needed. 

The support period is set to last from December 1, 2020 to March 31, 2024.

Raubenheimer said that African Bank does not "immediately require any additional wholesale funding or increased liquidity". 

"We do not anticipate a requirement to enter the domestic wholesale funding market in 2020 for any listed issuance, despite the Covid-19 pandemic," it said. 

"However, these support arrangements should provide further comfort and confidence to South African funders for future funding requirements. The bank will continue to focus on diversifying its funding sources, across its retail deposit book.

"The retail deposit products continue to be attractive to savers searching for the best interest rates in the domestic market. The retail book has grown significantly over the last few years totalling approximately R4.8 billion as at the end of June 2020." 

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