/ 22 March 2022

Reserve Bank fails to find buyer for African Bank stake

Report: African Bank Directors Were Reckless
The central bank announced it would dispose of its 50% shareholding given its potential conflict of interests as a regulator

The South African Reserve Bank said it has not found any suitable investors to buy its 50% shareholding in African Bank.

Last year, the Reserve Bank announced it would dispose of its stake given the potential conflict as the regulator, the significant shareholder and the lender of last resort to African Bank. 

African Bank was placed into curatorship in 2014, after it collapsed under the weight of bad debts. As part of the curatorship process the Reserve Bank, the Public Investment Corporation and a number of private banks took up a stake and recapitalised the “good” bank, while the worst of its loans were hived off into an entity that is now known as Residual Debt Services.

As a result of the curatorship, African Bank’s assets were split into two parts: the “good bank”, African Bank Limited, which was recapitalised and established as a new legal entity, and the bad book, which comprised a portion of the non-performing and under-performing assets that were housed in a separate legal entity and renamed Residual Debt Services Limited.

The “new” African Bank was launched in 2016. The bank recently reported a net profit of R534-million for the year ended 30 September 2021. 

But African Bank is not without its problems. In January last year, the bank announced the resignation of its then chief executive, Basani Maluleke, who had made history by becoming the first black woman at the helm of a South African bank. 

The bank was silent on the details of Maluleke’s resignation, saying only that she wanted to “pursue other career opportunities”. The announcement was met with outcry from various quarters, including the ANC Women’s League, which called the resignation a loss for all women.

In April 2021, Kennedy Bungane was appointed as Maluleke’s replacement. 

When the Reserve Bank decided to dispose of its 50% African Bank stake, it identified two potential exit options, namely a sale to investors and an initial public offering (IPO). 

The central bank invited interested investors, both local and international, to submit expressions of interest for the acquisition of the 50% shareholding. But, after considering the expressions of interest it received, the Reserve Bank concluded that none of the interested investors were suitable.

The Reserve Bank has thus decided to pursue the IPO route. “The timing of the launch of the IPO will be dependent on prevailing market conditions,” it said in a statement. 

“The period leading up to the IPO will provide ABHL [African Bank Holdings Limited] the opportunity to continue with its successful turnaround and execute its accelerated growth strategy.”