No imminent JSE listing for African Bank
Trading of African Bank securities remains suspended and the “new bank” may not be listed anytime soon, but the business is en route to recovery.
This is according to PwC’s Tom Winterboer, curator of African Bank, briefing media from the bank’s head offices in Midrand on Wednesday.
“We believe we have stable operation, the restructuring is well on track, committed to delivering a good bank,” he said. “It’s been a hard journey and an interesting journey and we are very encouraged as to where we are now.”
The journey Winterboer spoke of began on August 10, when it was announced that the South African Reserve Bank would place the flailing African Bank under curatorship and proposals for a resolution of African Bank were set out.
“We’ve managed to establish control and … the liquidity crisis has been settled. I think we are in a good position,” he said.
The bad part of the loan book, referred to as the “bad bank”, was initially expected to be split off from the “good bank”, but the intention now was to bring it back into the existing bank, said Winterboer.
Revival on track
The restructured entity was expected to list on the JSE in the new year, but this may no longer be the case.
“We have chosen to decouple the equity listing from the creation of a good bank – it’s possible we will delay listing,” said PwC’s David Gard, who is assisting Winterboer in the curatorship. The process of listing may delay the operation of the new bank, which remains the priority. “We would like to have the good bank operational as soon as possible,” said Gard.
Collections of debt owed were above initial expectations, Winterboer said, noting it was well above R2-billion a month. “We are quite happy with where it is,” he said.
But he added that an industry specialist had conducted a review and more measures would be implemented to improve collection.
Winterboer said sales numbers were a concern from the outset but had improved over the past four months. “August was not a good month, September was not so great. In October and November, applications and disbursements have picked up,” he said, adding that a new, tighter credit scorecard had been developed.
New loan applications were up by 19% in August and September, and disbursements rose by 12%. “We have upped the sales targets. That’s a positive development,” Winterboer said.
Gard said the curators were seeking to replicate African Bank’s existing bond programmes in the case of the new bank, which will then be listed in South Africa, London and Switzerland with an extended maturity of 24 months.
Existing senior creditors can then choose to exchange their existing bonds in the existing bank for these new programmes.
The South African Reserve Bank will still provide liquidity, but instead of this secured by the “bad book” transferred into a Reserve Bank special purpose vehicle, it will be left in the bank. The amount may be reduced from the expected R7-billion, Gard said.
The new bank will bring African Bank’s insurance arm, Standard General Insurance Company or Stangen (which is not under the curatorship), back into the group by selling it to the new company as a subsidiary. Stangen is being evaluated.
The bank will probably not be renamed, as was expected. “We believe the name is still a solid name and a prominent brand. We plan to keep it,” said Winterboer. “We believe the name African Bank will keep going into the future.”
A banking licence for the restructured entity was submitted to the Reserve Bank on October 28 “and we, in fact, on Monday had some feedback from Sarb [the Reserve Bank] and there were no major areas of concern”.
Eight potential board members have been identified and their names and detailed CVs submitted to the Reserve Bank. Once the board is approved, a new chief executive will be appointed.
Winterboer could not comment on the ongoing business rescue of Ellerines.
In the new year, he said, he would look at the operational expenditure budget and progress plans for the new bank more closely. He hoped to get African Bank’s annual financial statements out in the first quarter of 2015.