Renee Bonorchis
THE CURATOR of African Bank Investments Limited (Abil) is preparing the company for a return to the JSE next year.
“We need to submit applications with the JSE by the end of October or early November,” curator Tom Winterboer of PricewaterhouseCoopers said last week, a month after the failed lender sold a book of bad assets to the central bank.
An initial public offering was planned for the second half of February.
There had been “one or two expressions of interest for Abil, but nothing firm, so we’re going with the best route available for now”, he said.
Abil collapsed after saying on August 6 it needed to raise at least R8.5 billion to survive. That caused the stock to drop 95 percent in three days, while bond prices slumped by more than half. The central bank stepped in on August 10 to split the lender into a “good bank” and a “bad book”.
Abil’s securities were suspended on August 11, with the central bank saying senior debtholders would take a 10c loss in every rand while subordinated debtholders, preference shareholders and ordinary shareholders might lose everything.
“That’s still the way it’s looking,” Winterboer said.
Abil has continued lending and while there have been some resignations, there have been no staff cuts as the curator’s team tries to recoup bad debts amounting to at least R17bn. The central bank bought that book for R7bn last month.
To set up the company that may trade on the JSE, a new holding company and a new lender with a banking licence are being established.
The licence should be granted in the “next few weeks” and there might be a name change, depending on the extent of damage to the African Bank brand, Winterboer said.
“People are still coming to Abil for loans, although there’s a slight decline in applications,” he said. “People are also paying back their loans, so collections are in line with the pre-curatorship period.”
The collapse of Abil prompted Moody’s Investors Service to downgrade South Africa’s biggest banks, while money market funds recorded losses and moved to isolate Abil debt from the rest of their funds. Toyota South Africa was among firms that cancelled bond sales as investors shunned corporate debt.
FirstRand and Standard Bank Group are among six banks that, along with the Public Investment Corporation, the government pension fund administrator, will underwrite R10bn of the proposed new shares, investing their own money if there are not enough buyers for the stock.
“If there are good-quality assets, then definitely we’d take a punt,” Owen Nkomo, the head of Inkunzi Investments, said on Thursday. “We’d want to see loans that are active and being paid back nicely and consistently, and hopefully the bank will transform itself into other lines of business, or who’s to say it won’t end up back in the same place.”
In the past month, to make it easier for customers to repay loans, point-of-sale terminals had been placed in African Bank branches. Retailers such as Pick n Pay and Shoprite had been enabled to collect money on Abil’s behalf, the curator said.
For the future bank, while offering mortgages was not being considered, vehicle financing, transactional banking and virtual banking were all under discussion, he said.
The bleak outlook for the economy meant Abil’s biggest competitor, Capitec Bank, was more attractive, Simon Brown, the chief executive of JustOneLap, an investment and trading training website, said.
“African Bank was only a microlender.
“Talk is they will be different come February, and that may be so, but Capitec has proved itself whereas Abil still has to.”
The curator’s team consists of about 20 PricewaterhouseCoopers employees who have set up a makeshift office in Abil’s boardroom. The team has found three instances of reckless lending and has made the appropriate write-offs.
While “nothing specifically suspect” had been found, the team was looking at Abil’s credit models so the lender could release a “proper” set of results, he said. – Bloomberg