New African Bank to emerge

AFRICAN Bank, which collapsed in August, plans to start a new lender built from its viable assets by October, even as it forecast that losses posted for the full year would continue for the first half of this year.

Net losses were R9.3-billion in the fiscal year to the end of September 2014, compared with a restated loss of R5.9-billion in the previous 12 months, the lender said yesterday. The bank said it expected to report a loss of as much as R2.8-billion for the six months to the end of March.

Full-year results “were impacted by a weak operational performance on the advances book as well as certain once-off impairments”, African Bank said.

It shortened the time horizon on projections of cash flows to a more conservative 60 months from 120 months previously. This drove up provisions for defaulted accounts – customers who miss more than four payments – to 80% from a restated 64%, it said.

The central bank stepped in to attempt to rescue the failed lender and appointed Tom Winterboer as curator after funding seized up in August. The results were delayed as Winterboer’s team went through the accounts while trying to win back business and negotiate with investors.

If the rescue is successful, the lender will form what it calls a good bank in October from the remaining viable assets.

“It is going to take time to reflect better results and we don’t anticipate substantively improved operational results for the year ended September 2015,” Winterboer said.

The lender is finalising the appointment of a chief financial officer, a chief technology officer and non-executive directors for the good bank, it said. An application for a new banking licence is nearing completion.

It said it would give details on restructuring after the first-half results were published.

-Renee Bonorchis

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