JOHANNESBURG - Residual Debt Services, previously African Bank, said on Wednesday that it has funded the R3 billion South African Reserve Bank (Sarb) indemnity facility.
RDS is the bank under curatorship, previously African Bank, which was bailed out by the Sarb after a near-fatal collapse three years ago. African Bank's name was changed to Residual Debt Services Limited (RDS) on 4 April 2016 upon the successful restructuring of that entity.
Last month, the bank offered to repurchase up to R3.2 billion of domestic bonds in an effort to reduce the interest repayments on its debt.
The full funding of the Sarb indemnity facility by RDS releases the reserve bank and National Treasury of any further potential liability towards RDS. The Sarb indemnity facility is the facility that the Sarb provided to RDS for any potential relevant claims made against RDS by the new African Bank Ltd in respect of loans written before curatorship and transferred to the bank from RDS.
When RDS was placed into curatorship in August 2014, the Sarb, in consultation with the Minister of Finance, played a pivotal role in providing a number of support measures to strengthen the resilience of the South African banking system and provide the new African Bank Ltd with the best chance of a viable future. Tom Winterboer, the curator of RDS, said the full funding of the Indemnity reserve was a significant milestone.
"The full repayment of the Transaction Loan and the full funding of the Indemnity Reserve means that the SARB and the South African National Treasury are now fully released from their potential liability of R6.3 billion," Winterboer said. The full funding of the indemnity reserve means that, subsequent to the release of the audited annual financial statements for the year ended 30 September 2017, RDS can commence payments to the senior unsecured creditors on a six monthly basis from on-going collections on the RDS loan book.