Revived African Bank starts on better-than-expected base

THE relaunched African Bank started with billions more in assets than expected a year ago, the interim results of its predecessor showed on Thursday.

The old African Bank’s results for the six months to March showed the combined bank — then under curatorship — had R37.4bn in assets held for sale to the mooted “good bank”, which planned to launch with the bank’s performing loans.

The good bank, launched in April 2016 as African Bank, received R42bn in assets from the old bank, including R21bn in net loans and advances to customers.

The rest of the bank was renamed Residual Debt Services Limited (RDSL), which still remains under the curatorship of Tom Winterboer.

“The growth in assets held for sale is primarily as a result of positive cash generation resulting in the cash component growing from R8.2bn to R11.4bn,” Winterboer said.

RDSL’s only role involves collecting on loans — reported at R11.3bn at the end of March — that soured parent African Bank Investment Limited’s (Abil) prospects and resulted in its banking subsidiary being placed under Winterboer’s care in 2014.

Abil recently emerged from business rescue, and has one operating asset, the Standard General Insurance Company (Stangen). Abil chairman Mutle Mogase said on Thursday Stangen had generated R443m in profits for the company. It had R250m in unencumbered cash reserves after paying off creditors.

Winterboer said it would collect on the R11.3bn in soured loans until it became “uneconomically viable to do so”.

It would take two years to collect the remainder of a R3.3bn Reserve Bank loan to RDSL, with R1.8bn having been collected already.

“RDSL is likely to remain in operation for the next few years as it continues to collect on the remaining book,” Winterboer said. “RDSL first utilises these collections to repay the Reserve Bank loan. It will then commence building up an indemnity facility of R3bn, which is in place for eight years.”

During the six-month period, the combined bank advanced R4.6bn to customers, 23% up from the first half of 2015. It also made R1.8bn in average monthly collections, despite a weaker economic environment.

It reported a R646m loss for the six-month period, compared with the previous figure of R2.7bn, and lower than the R2.1bn forecast in its offer memorandum to investors.

RDSL is likely to remain in operation for the next few years