Failed South African lender African Bank Investments Ltd (Abil) is lending at levels below what is required to set up a new “good bank” using its healthy assets, administrators said on Tuesday.
The bank collapsed under a mountain of bad debt in August, forcing the government to appoint external administrators to oversee a restructuring that includes curving out a “good bank” using its healthy assets worth 26 billion rand ($2.2 billion).
Monthly advances ranged between 550 and 750 million rand since August, in line with lower risk appetite and expectations, the administrators said in a statement to investors.
“The holy grail is about 1 billion a month,” administrator Tom Winterboer said.
The administrators said they hope to name a new CEO by the end of March. They appointed veteran banker Louis von Zeuner as its chairman.
A new banking licence will be granted once parliament amends the Banking Act to allow rescue administrators to transfer a failed lender’s good assets to another bank. The revised law will also create room for the South African Reserve Bank to be a super-senior creditor, to ensure it does not lose taxpayer money spent in a rescue, Winterboer said.
Under the rescue, creditors will incur a 10 per cent “haircut” when they exchange their bonds for fresh debt in the new bank, and will have to extend the bonds’ maturity by two years.
The Reserve Bank is expected to inject up to 7 billion rand to recapitalise Abil, while a consortium of banks and the country’s largest pension fund administrator have agreed to recapitalise the new good bank with 10 billion rand.
A planned listing earlier envisaged for the first quarter has been pushed back indefinitely, Treasurer Gavin Jones said.
The bank has been collecting as much as 2.475 billion rand of debt a month since the rescue begun, administrators said.
The administrators plan to publish annual results for the year through September 2014 in April, not in the first quarter of 2015 as had been previously expected.
The bank said it was in the process of re-deploying or laying off some 50 non-union management level staff. Staff numbers have fallen by a thousand to about 4,700 through natural attrition.