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Johannesburg - African Bank, which owns South Africa’s largest provider of unsecured consumer loans, slid in Johannesburg after it said regulators want to fine the company 300 million rand ($34 million) for fraud.

The shares fell as much as 6.4 percent, the most in more than two and a half years.

The National Credit Regulator found that loan agents at a branch in Dundee, South Africa, colluded with customers to lower lending standards in exchange for cash, the Johannesburg-based bank said in a statement today.

“African Bank has handed the matter over to its attorneys and contests the reckless lending allegation,” the company said.

“Given that this was an isolated incident as a result of fraudulent activities and the organisation has suffered a consequential financial loss, African Bank believes that the proposed fine is unwarranted.”

The NCR said in October that it was probing firms including African Bank for inappropriate lending after consumer indebtedness soared.

South African consumer loans not backed by assets surged fourfold between 2009 and last year, according to research from the Johannesburg-based securities unit of Australia’s Macquarie Group.

African Bank declined 3.7 percent to 29.47 rand as of 1:54 p.m. in Johannesburg trading.

Yields on African Bank’s $350 million of 8.125 percent bonds due 2017 soared 13 basis points to 5.90 percent, the highest since November 12. - Bloomberg