African Bank up on move to sell EllerineComment on this story
Johannesburg - African Bank Investments Ltd, which owns South Africa’s largest provider of loans not backed by assets, surged after starting talks to sell its loss-making furniture-retailer.
The stock of Johannesburg-based Abil, as it’s known, jumped as much as 17 percent, the most on an intraday basis since July 2000, to 7.90 rand.
It traded 16 percent higher at 7.80 rand as of 9:49 a.m. in the city, paring losses this year to 35 percent.
Abil entered talks on the potential sale of Ellerine Holdings Ltd. and its subsidiaries, the successful conclusion of which may affect the lender’s share price, Abil said in a statement today, without giving details.
Rising bad loans and losses from Ellerine consumed some of the 5.5 billion rand Abil raised in a sale of stock to existing investors in December as unemployment of 25 percent and a shrinking economy left consumers struggling to pay debt.
Moody’s Investors Service cut the lender’s foreign rating a step to Ba1, one level below investment grade, on May 29 after the company posted a record fiscal first-half loss.
Abil’s profit will improve from 2015 after tightening lending standards last July, chief executive Leon Kirkinis said in a May 30 interview.
The company bought in 2008. - Bloomberg News