New 'African Bank' to list by February

A NEW "African Bank" will be listed on the JSE by February, though details remain murky.

A NEW "African Bank" will be listed on the JSE by February, though details remain murky.

Six of the bank's former rivals - FirstRand, Standard Bank, Barclays Africa, Nedbank, Investec and Capitec - have committed to African Bank's rescue, underwriting a R10-billion capital-raising exercise for the "good bank", which has R26-billion in loans after impairments for bad debt have been subtracted.

The "bad bank" contains bad debt, and the Reserve Bank bought its R17-billion in bad debt for R7-billion .

FirstRand CEO Sizwe Nxasana, who is the official spokesman for the banking consortium, said this week that the six banks did not necessarily want to be shareholders in the "new African Bank".

"We are there to support [African Bank] and make sure there is a resolution process which is well managed, well executed and does not create a contagion for the rest of the [banking] system," he said.

Tom Winterboer, African Bank's curator, said this week a shortlist for the CEO of the "new African Bank" had not yet been drawn up nor had he met former CEO Leon Kirkinis.

It is surprising that he has not met Kirkinis yet.

Kirkinis headed SA's largest unsecured lender until last month when he quit "with immediate effect" after revealing that his bank needed R8.5-billion to stay afloat.

An official inquiry will be held into African Bank's collapse to assess whether there was any "reckless" or "fraudulent" behaviour.

African Bank's share price plunged 95% in three days, its corporate bonds lost half their value and panic was triggered among money-market funds exposed to it.

Winterboer said the new bank would continue to make unsecured loans, but its risk appetite for good business would be "more robust". He said the bank would consider vehicle financing but not home loans.

Since taking charge, Winterboer has said there are potential buyers.

"If there is something interested parties and the [banking] consortium finds palatable, we will obviously look at it."

Though part of the challenge will be to slash costs, Winterboer said there are no plans to immediately reduce branches or cut its 5000-strong workforce.

Th ere is no regulated timeframe for the rescue of African Bank, but the plan to list the "good assets" by February does provide some sort of deadline.

It is still unclear how existing shareholders would be included in listing plans, which are expected to be submitted to the JSE by early November.