Moody’s downgrades Abil’s African Bank


Moody’s downgraded African Bank’s local national scale issuer ratings to from, as well as its global senior debt and deposit ratings to Caa2/Not Prime, from Ba1/Not Prime.

African Bank is a subsidiary of African Bank Investments Limited (Abil).

“Moody’s stated that the downgrade of African Bank’s ratings reflect the expected losses that senior bondholders and wholesale depositors of the bank will sustain, following the announcement by the South African Reserve Bank on 10 August 2014 that it placed African Bank under curatorship,” African Bank said in a statement.


“The review for downgrade, in Moody’s view, captures the implementation risks of SARB’s restructuring plan for African Bank, in conjunction with the risk of higher than anticipated losses that depositors and bondholders, other than retail depositors, could incur.”

[DATA ABL:African Bank] is a key player in South Africa’s unsecured lending industry, and last week reported an expected headline loss of nearly 6.4 billion rand for the financial year in a trading statement. African Bank’s CEO Leon Kirkinis subsequently stepped down, further diminishing the bank’s stock by almost 90 per cent.

(WATCH VIDEO: S.Africa’s Abil CEO resigns)

Tom Winterboer, financial services leader for Africa from PricewaterhouseCoopers, has since been entrusted by the South African Reserve Bank with curating African Bank.

“One has to understand the role of curator is really to look after the depositors and the creditors, their interests, also to look after the employees, which in the case here at African Bank, is absolutely crucial,” Winterboer told CNBC Africa.

“I think people have seen the proposed transaction that was announced by the governor on Sunday, and the big thing is to execute on that transaction.”

Winterboer added that it was also crucial that African Bank continued its business transactions as well as lending to its customers despite the curatorship.

(READ MORECuratorship the start to saving African Bank)

“The real thing is that people owe this bank money, and they should continue paying. From an African Bank perspective, one would obviously like to maintain a good relationship with the customers, so I think that’s hugely important,” Winterboer explained.

“The important thing here is just to firstly recognise that African Bank Investments Limited has got three main subsidiaries, being African Bank, Standard General and Ellerine Holdings. The curatorship is basically in the African Bank part. As far as the African Bank part is concerned, we’re very optimistic that that could work and we believe we’ve got a viable bank going forward.”