Johannesburg - The South African Reserve Bank may have no need to draw on a 7 billion-rand guarantee the government provided for African Bank Investments Ltd’s curatorship, Finance Minister Nhlanhla Nene said.
“We are confident that at the rate we are going about the process, we are unlikely to draw on the guarantee,” Nene told reporters today before presenting his mid-term budget to lawmakers in Cape Town.
“On that basis, we say we will not use taxpayers’ money.”
The guarantee is in addition to the 7 billion rand the Reserve Bank is paying for the unit’s 17 billion-rand book, Governor Gill Marcus said today.
The central bank stepped in to rescue the lender in August after African Bank forecast a record loss and announced the resignation of chief executive Leon Kirkinis.
It was was placed under curatorship after the so-called bad bank with soured loans was broken off from a good bank, which continues to do business.
“Our expectation is that the new African Bank will re-list on the stock exchange early next year and that the curatorship will be concluded without the use of taxpayer money,” Nene said in a printed copy of his budget speech.
The new African Bank is stable, the company is granting loans and open for business, Marcus said.
“It’s looking at a different business model and much stricter criteria around lending and therefore the loan book should be improving as we go forward,” Marcus told reporters. - Bloomberg News