Creditors of ‘bad bank’ get R500m
• Curator says good collections allowed Residual Debt Services to start paying out senior stubs
The “bad bank” that remains after African Bank collapsed is set to pay R500m to its senior creditors, thanks to a dramatic increase in its cash reserves
The “bad bank” that remains after African Bank collapsed is set to pay R500m to its senior creditors, thanks to a drastic increase in its cash reserves.
These rose sixfold to R3.675bn for the year ended-September, due largely to “good collections” on the existing debtors’ book.
The senior creditors include Stanlib, Momentum, Taquanta and Investec Asset Management, which were exposed to African Bank Investments when it collapsed and was placed under curatorship.
Their collective claim against the former African Bank, now known as Residual Debt Services, is worth about R5.38bn. Curator Tom Winterboer said the R500m in interest being paid to these creditors would be done in proportion to the percentage of the debt that they held.
“I would say that people are very pleased, they didn’t expect to get money already at this stage,” he said on Wednesday.
“Ultimately, it goes to holders of unit trusts. Stanlib, through their unit trust, for instance, would hold an investment in the senior stubs [the term for Residual Debt Services’s creditors], so what would happen is that the unit trust fund would receive R100m, say.”
Winterboer and his team are “running down” the residual loan book, which almost halved to R3.7bn at the end of September, from R7bn a year earlier.
Despite the fragile economy, Residual Debt Services said “specialised collections” — in other words, debt repayments that are harder to obtain than via a debit order — were slightly ahead of forecast, with cash collections running at about R120m a month.
The rate of collections also meant that its R3bn indemnity reserve fund was fully funded during the year.
The fund, which is held on deposit with SA’s banks, must be held for possible claims against Residual Debt Services until April 4 2024, after which the indemnity is set to expire.
However, Residual Debt Services said subordinated debt holders would not be paid, nor would African Phoenix – which owns Residual Debt Services, as well as Stangen and Ellerines, which is in business rescue – receive a dividend.