Reuters and Bloomberg
THE ADMINISTRATORS of failed lender African Bank Investments Limited (Abil) yesterday said they were in talks to appoint a new chief executive by the end of the month while at the same time mulling job cuts.
“We are in negotiations at the moment,” administrator Tom Winterboer said.
Abil, the bank that collapsed in August, said loan volumes were too low to set up the “good bank” creditors needed to recoup investments, prompting the administrators to consider job cuts.
“The level of disbursement is below the long-term sustainable level for the core bank targeted to create the new ‘good bank’,” the lender said yesterday.
“Total monthly disbursements have varied between R550 million and R750m. A review of the organisational structure of the workforce has therefore been undertaken.”
Abil failed last August amid record losses and a lack of funding.
Winterboer of PricewaterhouseCoopers was appointed by the Reserve Bank to rescue its good assets and achieve an initial public offering so that investors could recoup money.
“We need an average of R700m a month in disbursements and the Holy Grail would be R1 billion a month” for loan levels to be viable enough to establish the new bank, Winterboer said yesterday.
The bank has considered its sales methods and identified seven areas, including virtual channels, where it could boost lending, Winterboer said, declining to predict when loan targets may be reached.
Winterboer had said since August that no job losses were planned. But he said last Friday Abil was in talks to cut or redeploy 50 staff members.
The lender has lost more than 1 000 staff through resignations and natural attrition since August. Even so, new business volumes will need to rise to sustain current staffing levels.
Louis von Zeuner, former deputy chief executive officer of Barclays Africa Group, was chairman designate for the good bank, the lender said. Von Zeuner, who retired in 2012, “has worked closely with the curator on African Bank since August 2014 and will continue to operate in an advisory capacity to the curator until the anticipated good bank operation is established”.
Winterboer is expected to provide details in May of the lender’s proposed restructuring and to invite comment. If the reorganisation is approved and law changes that increase the powers of administrators of failed banks are passed, African Bank will make a formal offer to its creditors.
When African Bank collapsed, senior debt holders were told to expect a 10c loss on every rand invested, while other creditors were warned they may lose everything.
“Things are looking slightly better than we would have thought,” Winterboer said. “We still need to be cautious.”
The amended banking laws might be in place by the end of April, Winterboer said. The lender’s new entity might be awarded its banking licence by July, according to Winterboer.