African Bank curators stall their listing of 'good bank'

African Bank curator Tom Winterboer has postponed the floating of the "good" bank on the JSE, although there is a time limit on the support he has from the central bank.

It has been four months since Winterboer, a senior partner at PwC, took over as curator for the ailing bank.

Since then, he and his team have drawn up a new business plan and applied for a new banking licence.

They have also interviewed and sent a list of candidates for a new board position to the Reserve Bank and transferred R26-billion worth of loans to the "good" bank.

Things seemed to have been going according to plan until recently, when they had no choice but to postpone the listing from the first quarter of next year indefinitely.

The team also failed to publish African Bank's annual financial results as scheduled.

David Gard of PwC London, who has been working with Winterboer to help South Africa's largest unsecured lender get back on its feet, fired a warning shot at a group of debt holders that may lobby against the Banks Amendment Bill.

Gard said that if the Reserve Bank halted its support it might result in the curator having to change his plans. Investors are concerned that the bill may result in the reduction of some of their rights as creditors.

He could not say whether the Reserve Bank would discontinue its support for the curator's rescue plans for African Bank should the amendment bill be blocked.

However, he said: "It should be recognised that the support structure we have is time limited. It is not an open-ended support structure."

The Banking Amendment Bill gives the administrator of a failed bank the power to sell assets and rejig capital structures without consulting investors. This is what has most bondholders tied up in knots because they may lose their money altogether.

But the curator's team does not see things that way.

These sorts of amendment are done throughout the world, the team said, adding that the central bank needed to be sure that it would not be putting taxpayers' money at risk if it were to commit to additional liquidity for the embattled lender.

Gard hopes that once bondholders and other investors understood this point they would change their views.

He said the move was a critical part of providing certainty for the recovery of the senior debt.

The bill, which will move through parliament next year, provides curators with a timely restructuring, he said.

"To be honest, if I am senior creditor I would see this in the context that it provides a clear ability for us [curators] to deliver the deal. And they will be able to move forward with their investments," Gard said.

African Bank's collapse in August sent shock waves throughout the financial sector.

One of the effects was that Capitec delayed its rights offer.

When former governor Gill Marcus stepped in to rescue the bank, she told bondholders that they would have to take a 10% haircut while other investors might lose everything until there is a successful relisting of the bank.

South Africa's top six banks and the Public Investment Corporation formed a consortium to raise R10-billion for the group.

Warren Riley, head of equities at Warrick Wealth, said African Bank should take as long as it needed to prove that it was worth investing in again before it listed, while Winterboer reminded investors that it did not necessarily need to list on the bourse.

Riley thinks the uptake when it does return will be huge. "Unsecured lending is not going away, but is here to stay," he said.