African Bank’s ‘good bank’ seeks 2016 listing

African Bank Investments, the South African lender that failed in August, is expected to hold an initial public offering of its remaining viable assets in 2016, according to National Treasury.

“The listing of the good bank will now take place early next year,” Roy Havemann, the treasury’s chief director for financial stability, told parliament yesterday. The central bank’s injection may be “much smaller” than the initial estimate of R7 billion and “at this stage zero costs to taxpayers are anticipated”, he said.

African Bank collapsed in August amid record losses and a lack of funding. The South African Reserve Bank stepped in with a rescue plan, which involves separating the bad loans from the performing loans and reviving those viable assets through a listing on the JSE. If the reorganisation is approved and law changes that increase the powers of administrators of failed banks are passed, African Bank will make a formal offer to its creditors in May.

“Things are on track, except for legal impediments on transferring liabilities,” Havemann said, referring to amendments to the Banks Act that are opposed by holders of subordinated debt. The bank’s curator will invite comment on the proposal before presenting a completed offer, he said.

When African Bank failed, senior debt holders were told to expect a 10 cent loss on every rand invested, while other creditors were warned they may lose everything.

National Treasury now says the bank may change its business model to offer secured lending and target higher-quality credit risks. – Bloomberg