HANNA ZIADY: Well, with a nod from the minister of finance and its brand-new banking licence in hand, African Bank officially relauched today following a 20-month curatorship and a dramatic restructure that has seen its bad or non-performing loan book carved out of the new bank, which starts with a more conservative credit-granting policy and better provisioning for bad loans.
We are joined now by Tom Winterboer, curator of African Bank. Tom, thanks so much for your time today and big congratulations to you.
TOM WINTERBOER: Thank you very much. It’s good to be talking to you and ja, it’s great to be in the place where we are. It’s been a tough 20 months. We’d hoped to get it done a bit quicker, but had a number of stumbling blocks and so on. But nevertheless a major milestone for us.
HANNA ZIADY: Now the new African Bank, the “good bank” as it was previously called, is no longer a part of its former parent company African Bank Investments Limited, Abil. So who owns the new bank, Tom?
TOM WINTERBOER: As we said in our information memorandum, the South African Reserve Bank owns 50% of that. The PIC on behalf of the Government Employees Pension Fund owns 25% and the six large banks in South Africa the other 25%.
HANNA ZIADY: Is the plan for these players to sell their stakes over time and/or list the new bank?
TOM WINTERBOER: Ja. The intention would be to list the new bank firstly, and one would probably look at a period of between three and five years from now. And just important on that – the debt instruments were listed today in Johannesburg, London and Switzerland, but the actual listing would only happen in three to five years and one would think that a number of players would want to exit the shareholding via a listing then when it comes.
HANNA ZIADY: If I’m an African Bank Investments Limited shareholder, the now former parent of African Bank, and I have money in perhaps a money market fund that has been side-pocketed or I have direct money in Abil as an equity holder, what does the launch of African Bank mean for me?
TOM WINTERBOER: Firstly for the Abil shares, the previous holding company of African Bank, those holders of either preference shares or ordinary shares, they would get the benefit of whatever other values there are in the previous group. So the insurer and EHL, they would get that value – obviously first to the preference shareholders and then the ordinary shareholders.
Unfortunately, in African Bank itself we’ve got new shareholders and there is not sufficient money to go to the shareholders, so the Abil Holding, in terms of the waterfall, there’s a loan from the South African Reserve Bank, R3.3 billion – that gets settled first. Then a R3 billion indemnity. After that the senior creditors. The amount outstanding to them in terms of the … Instrument, the size R0.3 billion and only then the subordinates of R3 billion. So unfortunately I don’t think there is much chance of the shareholders then getting something.
HANNA ZIADY: But the point here to make is that African Bank is quite separate from Abil?
TOM WINTERBOER: Absolutely, ja. Clearly the new bank has new shareholders and they would be on their own. The old African Bank under curatorship, will continue with the name Residual Debt Services, continuing under curatorship, and the main thrust here would be to collect the outstanding debts. I think in the past we called it the “bad book”, and most of the work was clearly done by “good bank” to do those collections. But the effort then on those loans is to make sure that we’re able to repay as much as we can.
HANNA ZIADY: Abil of course remains under business rescue as well.
Let’s look at African Bank briefly, the new bank. Do we need another bank in South Africa Tom, and what is African Bank hoping to offer customers?
TOM WINTERBOER: I think competition in any industry is always very good. African Bank played a major role and I think with the better credit policy which has been in place since curatorship 20 months ago, that puts it in a good place in terms of certainly more conservative lending. But there is certainly still a market out there in terms of our previous LSM categories, to whom African Bank lent money.
Then secondly the new African Bank will look at moving a little bit up the LSM curve, also looking at different products. We talk of transactional banking that should come into place over the next year. Then also in terms of distribution, so that people are able to fulfil loans directly through the call centre. So a number of initiatives and then also, as you would have seen, the venture with Sanlam at the moment.
HANNA ZIADY: There you go. Tom Winterboer is the curator of African Bank, that bank launching officially again today with new credit-granting criteria, a more conservative provisioning policy and a plan to launch transactional banking next year. This year it will be launching a funeral insurance product, a stokvel event-based product, and also rolling out some savings and investment products along with Sanlam.