The Pretoria-based SARB has also confirmed a plan to provide nearly $1bn as capital injection to Abil, which is set to be split into ‘good’ and ‘bad’ banks.
South African Reserve Bank governor Gill Marcus said: "The curatorship is a protection procedure which gives the SARB the legal means to create the necessary space to implement a resolution plan capable of ensuring that the business of African Bank gains a secure perspective for the future as a lending institut ion with a transformed business model
"The Minister has appointed Mr Tom Winterboer as the curator . He will be responsible for African Bank with immediate effect , with the full authority the law confers on the curator."
With a book value of R26bn ($24.3bn) net of portfolio impairment, the good bank would be recapitalized by a R10bn ($9.3bn) capital raising underwritten by a consortium comprising Absa Bank, Capitec Bank, FirstRand Bank, Investec Bank, Nedbank, Standard Bank, and the Public Investment Corporation ( PIC).
Meanwhile, the bad book, which comprises a substantial portion of the non – and under – performing assets worth nearly R17bn ($15.9bn) would be acquired by SARB.
Commenting on support measures being implemented by SARB, Marcus said: "These will further strengthen the resilience of the banking system as a whole, and, importantly, they will provide African Bank with the best chance of a viable future."
The Johannesberg-based Abil has been recently hit by waves of bad loans, posting an estimated headline loss of R6.4bn ($6bn) for the full year to September 2014.
Marcus said: "The problems that have beset African Bank are, in our view, largely specific to their current business model, which does not include a diversified set of products and income streams, nor does it offer transactional banking services."
Image: African Bank is set to recieve nearly $1bn in capital injection from the South African Reserve Bank. Photo: courtesy of Leo za1.
