Abil’s fi­nal hours

Re­serve Bank had been work­ing for some time on so­lu­tions for be­lea­guered lender

CityPress - - Business - MOYAGABO MAAKE and THULETHO ZWANE busi­ness@city­press.co.za

Tom Win­ter­boer, PwC’s Africa fi­nan­cial in­dus­try boss, was in a meet­ing at 8am on Fri­day last week when he re­ceived a call from an of­fi­cial at the SA Re­serve Bank’s bank su­per­vi­sion de­part­ment, whose name he won’t pro­vide. Two days later, he was named cu­ra­tor of African Bank In­vest­ments Lim­ited (Abil).

Three days ear­lier, Abil re­leased a shock trad­ing up­date where it asked share­hold­ers for R8.5 bil­lion to im­prove its eq­uity and cap­i­tal po­si­tion af­ter worse-thanex­pected bad debts.

Share­hold­ers dumped stock, send­ing the group’s share price from 688c on Tues­day to 31c on the morn­ing of the of­fi­cial’s phone call.

It has sub­se­quently emerged that Coro­na­tion Fund Man­agers, which was the largest share­holder at 22%, was re­spon­si­ble for the bulk of the sell-off, as a joint let­ter by chief in­vest­ment of­fi­cer Karl Lein­berger and se­nior port­fo­lio man­ager Neville Chester to in­vestors this week stated that the in­vest­ment house had cut its hold­ings in the bank to less than 9% when the of­fi­cial called Win­ter­boer.

While Abil’s po­si­tion came as a huge shock to in­vestors last week, the bank, reg­u­la­tors and ad­vis­ers ap­pear to have been work­ing on a so­lu­tion for some time.

“There was a lot of work be­fore that with the reg­u­la­tor,” said Win­ter­boer, re­fer­ring to PwC’s work for the bank in the four weeks be­fore Re­serve Bank gov­er­nor Gill Mar­cus called a press con­fer­ence late on Sun­day af­ter­noon.

There, Mar­cus an­nounced the bank would be split in two with the “good bank” im­me­di­ately placed un­der cu­ra­tor­ship with R10 bil­lion in cap­i­tal. The “bad bank” was bought by the Re­serve Bank for R7 bil­lion.

David Gard of PwC Lon­don had been hard at work on this for a while and will be as­sist­ing Win­ter­boer with his du­ties with Bri­ton Peter Spratt.

Share­hold­ers have be­moaned Abil’s lack of trans­parency around its loan book.

“As out­siders, we do not yet know why the book per­formed so much worse than the rep­re­sen­ta­tions made by man­age­ment por­trayed,” read Coro­na­tion’s let­ter to clients.

Another fund man­ager, who rep­re­sented one of the largest share­hold­ers, said: “We were lied to by man­age­ment. We be­lieved the com­pany would be fine post the first rights is­sue. Surely your loans col­lec­tions will show if your bor­row­ers are re­pay­ing or not?”

Asked at which point Gard re­alised Abil’s pro­vi­sion for bad debts was woe­fully in­ad­e­quate, Win­ter­boer, who had only been in the job for five days, said that would form part of his work from now on.

The au­di­tors are not say­ing a word about what went wrong.

Mgcin­isih­lalo Jor­dan, the au­dit part­ner at Deloitte who has signed off on Abil’s re­ports since 2010, said he could not com­ment due to client con­fi­den­tial­ity.

Bernard Agul­has of the In­de­pen­dent Reg­u­la­tory Board for Au­di­tors said no re­portable ir­reg­u­lar­i­ties had been lodged with his body from the Abil au­di­tors.

Said Win­ter­boer: “We’ve met with the au­di­tors in the last day or two.”

The Na­tional Credit Reg­u­la­tor (NRC) be­lieves it has done its bit with re­gard to African Bank.

“The NCR in­ves­ti­gated African Bank for reck­less lend­ing and the mat­ter was set­tled with the bank pay­ing a fine of R20 mil­lion,” said Le­siba Mashapa, its com­pany sec­re­tary. Now it’s time to move on. El­ler­ine Hold­ings is in busi­ness res­cue, which Win­ter­boer says he can­not com­ment on be­cause he is only re­spon­si­ble for African Bank.

African Bank is buy­ing in­surer Stan­gen from Abil, which will di­ver­sify the bank’s in­come streams.

It is cru­cial that the good bank’s bor­row­ers con­tinue pay­ing, said Win­ter­boer.


UN­DER CARE African iank has been placed un­der the cu­ra­tor­ship of Tom Win­ter­boer. PwC’s Africa fi­nan­cial in­dus­try boss was in a meet­ing when he re­ceived a call from the SA Re­serve iank. He was ap­pointed cu­ra­tor two days later

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