Johannesburg - African Bank Investments Ltd is already preparing for a return to Johannesburg’s stock exchange after selling a book of bad assets to the central bank last month and being taken over by a state-appointed curator.
“We need to submit applications with the JSE by the end of October or early November,” Tom Winterboer of PricewaterhouseCoopers, curator for the firm known as Abil, said in an interview today.
An initial public offering is planned for the second half of February.
There have 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 8.5 billion rand 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 August 11, with the central bank saying senior debtholders will take a 10 cent loss in every rand while subordinated debtholders, preference shareholders and ordinary shareholders may lose everything.
“That’s still the way it’s looking,” Winterboer said in Johannesburg.
Abil has continued lending and there have been no staff cuts as the curator’s team tries to recoup bad debts amounting to at least 17 billion rand.
The central bank bought that book for 7 billion rand last month.
Nothing Suspect
While Abil will charge for funding and recovery costs, it should be able to recover more than 7 billion rand, Winterboer said, adding that an investigation of the bank’s operations has found nothing “specifically” suspect.
To set up the firm that may be listed on the JSE, a new holding company and a new lender with a banking license are being established.
The moves may result in a name change, depending, on the extent of damage to the African Bank brand, he said.
“People are still coming to Abil for loans, although there’s a slight decline in applications. People are also paying back their loans so collections are in line with the pre-curatorship period.”
African Bank’s collapse caused 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.
Supporting Banks
Six banks, including Standard Bank and FirstRand, and government pension fund administrator the Public Investment Corporation will underwrite 10 billion rand of the proposed new listing shares, investing their own money if there are no buyers for the stock.
“If there are good quality assets, then definitely we’d take a punt,” Owen Nkomo, head of Inkunzi Investments, said in a phone interview from Johannesburg today.
“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 have been put in African Bank branches and retailers like Pick n Pay Stores and Shoprite, have been enabled to collect money on Abil’s behalf, the curator said.
For the future bank, while offering mortgages isn’t being considered, automobile financing, transactional banking and virtual banking are all under discussion, he said.
Leon Kirkinis, who founded Abil in 1999 and resigned on August 6, isn’t involved in the rescue, according to Winterboer.
While the central bank has, as is standard, appointed a commission to investigate the bank’s collapse, the curator’s team won’t scrutinise Kirkinis’s assets until the report covering the Abil probe is published in February or March, Winterboer said.
A stock exchange statement to update the market is due on September 16 at the earliest.
Abil’s full-year results will be released at the end of November, according to Winterboer. - Bloomberg News