African Bank Logo

African Bank Good Bank Launch Postponed

Reading Time: 2 minutes

Failed Asset Sale Delays Good Bank

A deal to sell off part of African Bank has resulted in African Bank’s Good Bank launch being pushed back (but not written off) till at least April 2016.

Insurance Company Stagen was part of African Bank and was one of the many insurance companies who were making a ridiculous fortune insuring credit and seeing very few claims. This seems to have confused shareholders as to the real value of the company which African Bank Curator Mr Tom Winterboer was in the process of trying to sell off. ABIL were trying to sell the company to African Bank for 1.4 Billion but 2 of it’s BEE shareholders tanked that sale when they went to court and got an urgent interdict against the sale and demanded more money.

Ironically this seems to have tanked their whole deal and see the firm simply being liquidated and getting almost no return on their investment. It could also potentially have seen the whole African Bank business rescue come crashing down without some fancy footwork by Mr Winterboer. Tense times for the SA banking industry.

Is the firm actually worth more?

Stagen supposedly had R1.6 Billion lying around in March 2015 (on it’s balance sheets). It is also slated to make a lot of profit should it continue running. Mr Winterboer points to the harsh reality that if they do not go into business with Good Bank then they have no clients and can look forward to no profits what so ever. Beyond that it is doubtful that profits will remain as high  in the changed waters of the insurance industry at present. There has been a growing outrage in government and the public at the overpricing of insurance on credit and new regulations are seeing this former cash cow been slowly drained of its crazy profitability.

Shooting themselves in the foot

Tom Winterboer African Bank curatorIt now looks like Stagen are indeed being cut out of the rescue deal entirely and their role is now being replaced by another firm which African Bank will be creating themselves. This has meant a lot of extra paperwork and agreements regarding liability etc but looks like we will see the entity in place for a April launch for Good Bank. It appears that the Stagen shareholder’s desire for a higher selling price has shot themselves in the foot and African Bank will simply side step them on the way to re-establishing the bank. Mr. Winterboer has said any renegotiation is unlikely as he wants to avoid any further delays.

 

 

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *