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Update on Curatorship, restructuring, further cautionary announcement, continued suspension and related matters
AFRICAN BANK INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registered bank controlling company)
(Registration number 1946/021193/06)
Ordinary share code: ABL ISIN: ZAE000030060
Preference share code: ABLP ISIN: ZAE000065215
(“ABIL”)
and
AFRICAN BANK LIMITED (in Curatorship)
(Incorporated in the Republic of South Africa)
(Registered bank)
(Registration number 1975/002526/06)
Company code: BIABL
(“African Bank” or “the Bank”)
Further update on the Curatorship of African Bank and proposed restructuring measures,
further cautionary announcement and continued suspension of all debt securities of the
African Bank and all equity securities of ABIL and other related matters
Background
1. Shareholders and interested parties are referred to the statement regarding the Curatorship of
African Bank ("the Curatorship") that was made by the then Governor of the South African
Reserve Bank ("SARB"), Ms. Gill Marcus, on 10 August 2014 ("the SARB statement") and to
the Stock Exchange News Service ("SENS") announcements released by ABIL and African
Bank on 26 September 2014 and on 10 December 2014 ("the Previous Restructuring SENS
Announcements").
2. The SARB statement noted that Mr. Tom Winterboer was appointed as Curator of African
Bank ("the Curator") in terms of the South African Banks Act No. 94 of 1990 (as amended) on
10 August 2014. At the same time the SARB statement set out proposals for a restructuring of
African Bank ("the Restructuring Proposal").
3. Whilst this announcement is made jointly by African Bank and ABIL, the directors of ABIL
would like to note that as African Bank is in Curatorship they are not part of the decision
making process relating to the Restructuring Proposal, as detailed in the Previous
Restructuring SENS Announcements, and which will have a material impact on ABIL.
4. This further announcement is intended to provide ABIL and African Bank stakeholders with an
update on the progress towards the restructuring of African Bank and related matters.
Curatorship Update
1. The Bank continues to operate in a stable manner, with loan disbursements and loan
collections in line with expectations, albeit that loan disbursements are at lower levels (but
higher quality) on a year on year basis.
2. Total monthly disbursements have varied between R550 million and R750 million between
August 2014 and January 2015, in line with the lower risk appetite and expectations.
3. This level of disbursement is below the long-term sustainable level for the core bank targeted
to create the new “Good Bank”, and efforts continue to target improved, risk appropriate and
profitable disbursements.
4. Total monthly collections have varied between R2,075 million and R2,475 million between
August 2014 and January 2015.
5. Given the relative stability achieved since the Curatorship began, one aspect of the Bank’s
executive team’s focus has been on deriving improved efficiencies for the Bank’s business as
it moves towards its anticipated new phase within Good Bank, with, at least initially, a lower
level of activity than that undertaken by African Bank prior to Curatorship. A review of the
organisational structure of the workforce has therefore been undertaken in order to realise
some of these efficiencies.
6. As a direct result of this, the Bank’s management has embarked on a consultation process for
the re-deployment or retrenchment of some 50 non-union management level staff members,
currently employed at the Bank’s central office in Midrand. In due course redeployment
consultations across the wider Bank may be considered as a means to achieving some of the
intended improved efficiencies.
Appointment of Acting Good Bank Chairman Designate
1. The Curator is pleased to announce the appointment of Mr. Louis von Zeuner (53) as
Chairman designate to Good Bank.
2. Louis has worked closely with the Curator on African Bank since August 2014 and will
continue to operate in an advisory capacity to the Curator until the anticipated Good Bank
operation is established.
3. Louis retired from Absa Group Limited as Deputy Group Chief Executive in December 2012
after 32 years in its employ. He has accumulated a wealth of in-depth knowledge of the South
African banking industry over the years, including holding directorships in Absa Group Limited,
Absa Financial Services and the Banking Association of South Africa. Previously, Louis
headed up the Retail and Business Banking at Absa and was part of the team to develop and
lead Absa’s strategy for 2000. Louis served on a number of committees while at Absa,
including the Group Investment, Audit and Compliance, Finance and the Human Resources
and Remuneration Committees.
4. Louis currently serves as a non-executive director on various boards including that of MMI
Holdings Ltd, Telkom SA Ltd, Edcon (Pty) Ltd, Afgri Ltd, Paycorp (Pty) Ltd as well as Cricket
SA and SA Rugby. His education includes a Bachelor of Economics from the University of
Stellenbosch and he has completed several training courses with global institutions.
Restructuring Proposal update
The Curator announces the following outline of the process with regard to the further development
of the Restructuring Proposal:
1. The intended details of the Restructuring Proposal remain as per the Previous Restructuring
SENS Announcements unless indicated otherwise.
2. This intended restructuring approach announced by the Governor of the SARB on 10 August
2014, and as commented on within subsequent SENS announcements of the Bank, remains
the optimal solution available to the Curator, and accordingly detailed work has continued to
target the delivery of the Restructuring Proposal.
3. It is expected that the Curator will provide an Information Memorandum (“IM”) to the affected
parties detailing the intended restructuring approach to African Bank, towards the beginning
of May 2015. The IM will be made publicly available and its expected publication date and
outline will be communicated in a SENS announcement in due course.
4. The IM is intended to inform affected parties of the proposed restructuring of African Bank,
including details of anticipated offers to affected creditors and other parties, the financial
information supporting the anticipated approach and details of the alternative approaches
assessed and rationale for following the anticipated approach the optimal approach in the
circumstances.
5. Once the IM has been published, the Curator will invite comment from all affected parties on
the anticipated approach and will consider such comments, prior to the Curator ruling on the
optimal way forward. It is expected that certain non-financial aspects of the IM may be
provided to all affected parties at an earlier date, in order to facilitate engagement with and
comment from affected parties.
6. At this time, unless credible alternatives are submitted to the Curator, the optimal approach is
expected to be the Restructuring Proposal. To deliver the Restructuring Proposal, certain
amendments to the Banks Act have been identified and a proposed Banks Amendments Bill
which includes such changes is currently progressing through its parliamentary review (see
comment below).
7. If, following the receipt of comment from affected parties, the Restructuring Proposal remains
the optimal approach, then, consequent to the Banks Act amendment being concluded, the
Curator expects to make a formal offer to affected creditors of African Bank (“the Exchange
Offer”). Such offer would be subject to the approval of the Minister of Finance.
8. To allow affected parties to evaluate the merits of any such Exchange Offer, a comprehensive
disclosure of prospective financial information for Good Bank (as reviewed by reporting
accountants) and African Bank is expected to be made publicly available. The proposed
terms of the Euro medium term note (”EMTN”) and Domestic medium term note (“DMTN”)
programmes for Good Bank, as approved by the United Kingdom Listing Authority and
Johannesburg Stock Exchange respectively, will also be provided. Where available, this
information will also be provided in the IM.
9. Whilst the Curator continues to be guided by the Restructuring Proposal, he has not taken
any decisions as to the most appropriate means to restructure African Bank and will not do so
until after undertaking a fair consultation process with interested parties. The Curator will
consider all credible alternatives to the Restructuring Proposal.
Banks Act Amendment Bill, 2014
1. The Banks Act Amendment Bill, 2014, (“the Bill”) was presented to the Parliamentary
Finance Committee and commented on by various interested parties on 3 and 4 February
2015. It is anticipated that the next parliamentary committee hearing on the proposed Bill
will take place in the middle of March 2015.
2. The successful restructuring of African Bank, as is currently envisaged, is dependent on
the passing into law of the Bill.
Publication of the audited financial results for the year ended 30 September 2014 and the
reviewed financial results for the six months ended 31 March 2015
1. African Bank expects to provide the annual financial results and audited financial
statements for the financial year ended 30 September 2014 during April 2015.
2. Further to the SENS announcement of 23 December 2014, the Board of ABIL regrets to
announce that it now expects to publish the annual financial results and the audited
financial statements for the financial year ended 30 September 2014, during May 2015 and
not during the first quarter of calendar 2015 as previously stated.
3. While significant progress has been made in dealing with and finalising the complexities
referred to in the SENS announcement of 23 December 2014 (Further business update
and timing on the release of ABIL’s audited results for the financial year ended 30
September 2014), specific complexities among others, related to changes in accounting
policies related to African Bank require further attention which has caused the further delay
in the publication of the group audited financial statements.
4. The Curator and the Board of ABIL expect to be able to release the reviewed results for the
six months ended 31 March 2015 during June 2015.
Further cautionary announcement and continued suspension of all debt securities of
African Bank and all equity securities of ABIL
During this time, trading in both the debt securities of the Bank and the equity securities of ABIL
will continue to remain suspended. Investors are therefore advised to continue to exercise caution
when dealing in the debt securities of the Bank and the equity securities of ABIL until further
detailed announcements are made.
On behalf of the Board of ABIL in so far as the information is applicable to ABIL and the Curator in
so far as the information is applicable to African Bank
Midrand
3 March 2015
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Footnote : T Winterboer was appointed as Curator of African Bank Limited on 10 August 2014 by
the Minister of Finance of the Republic of South Africa and pursuant to the Banks Act No. 94 of
1990 (as amended) to manage the affairs of African Bank Limited subject to the supervision of the
Registrar of Banks. Please note that Mr Winterboer acts in the aforesaid capacity.
Date: 03/03/2015 09:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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