Who bailed the bank out
The consortium which has raised R10 billion to save African Bank is made up of Absa, Investec Bank, Nedbank, Standard Bank, Capitec, First Rand and the Public Investment Corporation (PIC).
One of the consortium members, who spoke on condition of anonymity, said they were asked by the Reserve Bank to underwrite the recapitalisation of the “good new Abil” – as Abil has been split into a “good” and “bad” bank.
“The details of the split of the underwriting have yet to be made public,” he said.
“We have become part of the consortium to provide assistance to the [Reserve Bank] to maintain a stable banking sector, not for a long-term shareholding in a competitor. That is not our goal.” The PIC was one of Abil’s largest shareholders. Absa’s Money Market Fund, worth a total R51.6 billion by June 30, had the highest exposure to African Bank instruments at R1.8 billion. Ratings agency Fitch Ratings downgraded the fund four notches to A (Zaf) on Wednesday, citing its high exposure, as well as the length of this exposure, to Abil debt.
Also by June 30, various retail funds in Investec Asset Management were exposed to Abil debt to the tune of R443.1 million. Fitch placed one of them on “rating watch negative”, along with another fund, the Investec Money Market Fund, which did not have substantial Abil holdings by June.
But Investec Asset Management’s Kotie Basson said it operated “entirely independently” of Investec Bank.
“We therefore cannot comment on the rationale for doing so,” she said.
Nedbank’s Nedgroup Investments Core Income Fund and Money Market Fund collectively held R875.6 million in Abil instruments by June. Both were also placed on a negative ratings watch by Fitch, along with Stanlib’s Extra Income Fund, which had a R351.8 million exposure to Abil by June.
But curator Tom Winterboer downplayed most of the consortium’s exposure to Abil instruments.
“It’s not specifically about Investec, it’s not specifically about Nedbank at this stage,” he said.