Bank savers bitten

Consumers with Absa money market accounts woke up a little poorer this week, a direct effect of the African Bank fallout.

Absa Money Market Fund accounts were reduced by 0.3% on Monday. Savings and cheque accounts were not affected.

Money market investments have traditionally been seen as a fail-safe way to save money.

But on Monday the statements of Absa money market account holders had a line that read "adjustement [sic] debit" and a rand figure with a negative symbol in front of it.

Customers were irate.

"There is no way you can take out money and call it an adjustment," Marilyn Perry said.

She had set herself a financial target in her money market account. "I was excited when I reached this target, but then I looked at my account and discovered that it was R639 less. I thought my account had been hacked."

Perry's complaint was that Absa had not communicated that the reduction was to happen. "They could have drafted an e-mail."

Absa said it did not have time to send out a communique to all its money market account holders.

The bank would not specify how many accounts had been affected or how much money in total had been deducted.

By last night it was not clear whether customers with money market accounts at other banks were affected. Standard Bank said it was not affected.

Financial analyst Stuart Theobald reported this week that African Bank had obtained 25%, or R14.1-billion, of its funding from managers of either money market funds or funds with a mix of assets including cash.

On Sunday, the South African Reserve Bank placed the troubled Abil under curatorship.

The bank's shares had plummeted last week to a low of 28c on Friday - from a high of R30 a share in 2012. The Reserve Bank became involved after a trading update that showed the lender's future was under threat.

In a bid to save Abil, it was split into a "good bank'', with a R26-billion loan book, and a "bad bank" whose R17-billion loan book the Reserve Bank bought for R7-billion. The good bank will be listed on the JSE and recapitalised.

A consortium of several major banks had committed to recapitalising the bank by underwriting R10-billion.

On Monday, the Financial Services Board set out guidelines.

"The announcement stated that all Abil non-listed fixed-interest instruments in investment portfolios or broadly held by investors be written down by 10%," Absa spokesman Zobuzwe Ngobese said.

"The Absa Money Market Fund's exposure to Abil is about 3.16%, therefore 10% of this is 0.316%."

Ngobese said the FSB circular stipulated that the reduction had to be effected by Monday.

Another Money Market Fund account holder said the adjustment cost him R10000.

"It is a sad situation," said economist Mike Schussler. "These are not shareholders but a little old lady at such and such who has no idea of African Bank."

On Wednesday, the Absa Money Market Fund was downgraded to A from AA+ by Fitch ratings. The reason for this was that the fund had the highest, longest-dated exposure to African Bank and Fitch said it considered "the level of loss incurred inconsistent with a highly rated, stable" fund.

Andrew Canter, the chief investment officer at Futuregrowth Asset Management, said the Reserve Bank had to take the decision to keep trust in the financial system.

''The danger would have been a run on African Bank, a run on selling Abil unit trusts and the bank's clients not paying back what they borrowed," he said.

"This was an intelligent response from the Reserve Bank."