The JSE and finance forum for South Africa
General Category => Shares => Topic started by: AVM on October 28, 2013, 10:33:54 am
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How low can they go? :wtf:
To date, companies announced steady results, except for African Bank [JSE: ABL] that warned investors that their earnings will show a drop of around 90% in the current 12 months when the company announce their results in a few weeks' time.
The culprit is much higher provisions for bad debt on their largely unsecured lending book.
http://www.fin24.com/Markets/Equities/JSE-What-to-watch-this-week-20131027
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???
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Consensus has changed to 'buy' 25/10 on ABL.
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>:(
Is there money to be made here ?
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>:(
Is there money to be made here ?
There's a rights issue coming up allowing shareholders to buy additional shares at R8.00. I believe that this will have a negative effect on the price, bringing it down to between R12.50 / R13.50. But hey! If you hold the shares already and then participate in the issue, you'd be averaging down along with the price anyway. Otherwise, wait until after the rights issue, then buy at a lower price.
Long term though - not my kettle of fish (excuse the pun).
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Thanks .... ... ... :TU:
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price dropped so much today, because the shares are now trading ex-entitlement of the rights offer
AFAIK the rights offer closes on 29Nov - so how will this be handled in this game? It would be unfair if we were expected to hold reserves in order to participate in the rights offer - Can we perhaps get our December funds on 29Nov or sell our rights?
EDIT: I see now that the rights offer shares are traded 1st week of December, so that should be OK
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??? :'(
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TRADING STATEMENT AND RELATED INFORMATION
In terms of the JSE Limited Listing Requirements ("Listings Requirements"), companies are obliged to publish
a trading statement as soon as they are satisfied that a reasonable degree of certainty exists that the financial
results for the period to be reported upon next will differ by at least 20% from the financial results for the
previous corresponding period.
Accordingly, shareholders of ABIL are advised that, for the six months ended 31 March 2014, the Company
expects a headline loss of between R3,1 billion and R3,3 billion relative to the R604 million restated headline
earnings for the equivalent six months to 31 March 2013 and the headline loss per share is expected to be
between 239 cents and 254 cents relative to the comparable restated headline earnings of 62,3 cents per
share. The basic loss is expected to be between R4,3 billion and R4,5 billion in relation to the R602 million
restated basic earnings for the comparative period. The basic loss per share is expected to be between 331
cents and 347 cents per share compared to the restated basic earnings of 62,1 cents per share for the
comparative period.
The operating environment continues to be challenging, with consumers remaining under financial pressure.
The loans business written up to the end of June 2013 ("pre July 2013 business") continues to produce an
elevated level of non-performing loans ("NPLs") each month whilst the business written post June 2013
shows the expected level of reduction in credit risk due to the stricter underwriting interventions implemented
in July 2013. Consumer spending on furniture and appliances remains very subdued.
Banking Unit
The Banking unit is expected to show a headline loss of between R1,9 billion and R2,0 billion due to:
- An increase in specific provisions of approximately R600 million driven by the following factors:
o NPL emergence on business written pre July 2013 being at higher than anticipated levels.
The total NPL formation in this reporting period was approximately R6 billion, which was
about R600 million more than the level anticipated; and
o An increase in specific provision coverage on NPLs of over 1% from 30 September 2013 to
31 March 2014. This is due to seasonal factors that impacted collections and a continued
challenging collections environment.
- A decision to significantly increase the general provision for credit impairment relating to the
performing loans ("PLs") by approximately R2,5 billion.
Although the expected slowdown in NPL formation is evident, this decline is taking longer than originally
anticipated. More than 25% of the NPL's that emerged in each of the first three months of this period came
from business written in the last quarter of the 2012 calendar year, which was impacted by particularly high
volumes and poor quality. This emergence of NPLs has since reduced to an average of approximately 15%
in the second three months of this period. It is expected that the emergence of NPLs from the last quarter of
2012 will gradually fall further in the months ahead. Vintages on business written in the period post June
2013 reflect improvement in credit risk which is evident from the loans that have missed two instalments to
the end of March 2014 after three months on book being at 1.9% versus the equivalent of 2.8% at March
2013.
In light of the elevated level of NPLs emerging from the pre July 2013 business, a decision has been taken to
significantly increase the general provision on PLs that are anticipated to become NPLs in the next six
months and beyond. This general provision will be transferred to the specific impairment provision as and
when the expected higher than normal level of NPLs from the pre July 2013 business emerges. This action
is being taken to prevent future results from continuing to be adversely affected by the higher level of
emergence of NPLs from the pre July 2013 business. The benefit of taking this step of accelerating the
provision for future credit risk NPL emergence positions the business for an earlier recovery.
Excluding the impact of the increased impairment charge of approximately R3,1 billion, normalised headline
earnings for the Banking Unit would have been between R232 million and R332 million, in relation the
comparative period restated headline earnings of R604 million.
Retail Unit
The Retail Unit headline loss is expected to be between R1,2 billion and R1,3 billion for the six months to
March 2014 in relation to the nominal profit for the corresponding period. Trading conditions in the furniture
industry continued to deteriorate during the period, as both the willingness and ability of consumers to spend
came under further pressure. This unit continues to be negatively impacted by African Bank’s stricter
underwriting criteria. Efforts to further reduce costs and maintain firm margins did not sufficiently counter the
decline in merchandise sales. The loss was exacerbated by the deferred tax adjustment. In light of the
operating losses, a decision has been taken to cease raising any further deferred tax on these losses which
would have been a credit to headline earnings of approximately R180 million and to impair the deferred tax
asset held at 30 September 2013 of R723 million. This asset will only be recognised in the future once the
business starts to generate an operating profit.
Excluding the effect of these adjustments the retail unit would have generated a headline loss of between
R300 million and R400 million in relation to the comparative restated headline earnings of R4 million.
In addition, the following two items which do not impact headline earnings, do affect basic earnings:
- Given the trading environment, a decision has been taken to write off the residual goodwill
attributable to the retail unit of R831 million, which includes R115 million held at the group level.
- Trademarks which are no longer expected to be utilised amounting to approximately R600
million were impaired.
ABIL continues to work towards the disposal of Ellerines, but in the interim is also focussed on returning it to
profitability.
Capital Adequacy
The group and Bank’s capital adequacy ratios had initially improved significantly as a result of the rights
issue, but has since been impacted by this set of results. The board has implemented certain measures to
preserve and increase capital through both operational and strategic initiatives and is pursuing additional
measures. The write down of the deferred tax asset, trademarks and the goodwill in the Retail unit has no
impact on regulatory capital as these items were already deducted from capital
Liquidity and Funding
African Bank continues to adopt a conservative stance to its asset and liability management policies. Given
the lower sales volumes as a result of both the lower demand for credit and ABIL’s stricter credit underwriting
criteria introduced in June 2013, cash collections from the debtors book continue to exceed cash
disbursements on new loans by approximately R1 billion a month. As at 31 March 2014, the bank had
approximately R5 billion in cash balances.
Dividend policy
In light of the forecast interim results as discussed above, the board has decided that no interim dividend will
be declared in 2014. Further details on the dividend policy going forward will be provided with the release of
the final results on or about 17 November 2014.
The forecast financial information, on which this trading statement is based, has not been reviewed nor
audited and reported on by the Company’s auditors.
ABIL’s results for the six months ended 31 March 2014 are expected to be released on SENS and RNS on
or about Monday, 19 May 2014. The Company is in a closed period and will therefore engage with
shareholders from 19 May 2014 to explain fully the results for the period.
ABIL will be holding a conference call with investors and analysts at 16:00 SA time, on Monday 5 May 2014.
Given that ABIL is in a closed period, no questions will be taken from participants on the conference call.
Conference call Access numbers for participants dialling from their country:
Live call 48 hour playback Code 28767#
South Africa & Other South Africa & Other
Toll 011 535 3600 011 305 2030
USA USA
Toll free 1 855 481 5362 1 855 481 5363
UK UK
Toll free 0 808 162 4061 0 808 234 6771
On behalf of the board
Midrand
2 May 2014
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Down nearly 13% today, and I have a feeling it hasn't bottomed out yet...
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Down nearly 13% today, and I have a feeling it hasn't bottomed out yet...
Agree, thanks goodness I am at work today .. 8) If on leave I never would have seen the move
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OK, so when it hits R3.00 we can buy it at half the NAV. Sounds like a plan.
Financial features for the six months ended 31 March 2014
- Headline loss of R3,1 billion ( 1H13: restated earnings of R 604 million)
- HEPS loss of 240,7 cents (1H13: restated earnings of 62,3 cents)
- Basic loss of R4,4 billion (1H13: earnings R602 million)
- Basic loss per share of 337,6 cents (1H13: earnings 62,1 cents)
- Banking unit gross advances grew by 5% to R61,6 billion (1H13: R58,8 billion)
- Income from operations increased by 1% to R10,9 billion (1H13: R10,8 billion)
- Ordinary dividends per share of 0 cents (1H13: 25 cents)
- Net asset value (NAV) per share attributable to ordinary shareholders decreased by 62% to 635 cents (1H13: restated 1 653 cents)
- Tangible net asset value (NAV) per share attributable to ordinary shareholders decreased by 28% to 623 cents (1H13: restated 870 cents)
- Return on equity of negative 54,6% (1H13: restated positive 9,1%)
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One word comes to mind when describing those results: "Disastrous"
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Agree 100%
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Your timing was great on this one jaDEB.
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Your timing was great on this one jaDEB.
Thanks. Now if GLN can go to R60, while OCE stays below R84. I will sell GLN and buy OCE :TU: O:-) :-X ???
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AFRICAN BANK LIMITED
(Incorporated in the Republic of South Africa)
(Registered bank)
(Registration number 1975/002526/06)
Company code: BIABL
(“African Bank”)
MOODY’S DOWNGRADES AFRICAN BANK’S LOCAL AND GLOBAL CREDIT RATINGS
ABIL announces that Moody’s Investors Service (“Moody’s” or “the agency”) has, on 29 of May 2014,
downgraded African Bank Limited’s local national scale issuer ratings by one notch to A3.za/P-2.za from
A2.za/P-1.za and its global senior debt and deposit ratings by one notch to Ba1/Not Prime, from Baa3/Prime-
3. African Bank thereby maintains its national scale investment grade rating. In addition, the long term
ratings have been placed on review. The conclusion of this review will likely follow the publication of the
Bank’s trading update for the nine months ending June 2014. African Bank announced a headline loss for
the six months ended March 2014 and this rating action reflects Moody’s assessment of the deterioration in
African Bank’s asset quality.
ABIL stated in its recent interim earnings results announced on the 19th May 2014, that the group has raised
a general provision of R2.5 billion to deal with the higher level of expected non-performing loan (“NPL”)
emergence. The significantly improved quality business written since July 2013, when stricter underwriting
interventions were implemented, is growing in proportion of the total book and is expected to start positively
impacting future financial results. The Bank continues to be adequately capitalized and liquid.
Midrand
30 May 2014
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I normally wouldn't care about an unsecured lender going bust themselves, but why does CML have to own so much ABL :frustrated:
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Test
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See Poll above
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Any1 else thinking of buying below R6 ?
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I don't see this company surviving in the long term , but that's just my opinion.
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Thanks Nivek. But some of the investment companies have been buying small %, and have even more in their portfolio.
Low today was R5.78 now R6.49 - 10 % swing.
But yes, in I agree with you, just needed a second opinion. :whistle:
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Sold all my ABL in Comp on Friday lol :LHST:
Now question is : -
Abil bought Ellerines in 2007 for R10.6bn to widen its product offering to include furniture sold on credit.
If they are selling it for lot less than R10bn ? then share price will tank again ? True ?
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no, Ellerines is not worth R10B and that fact has been in the ABL share price for some time - Ellerines is just costing them money, so if they get R4B for it, it's probably good for ABL, no further losses
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Abil has a serious problem - they need to raise R 5 bill. with Ellerines in their portfolio. Now if they would unload the furniture business for R 4 bill.
then they would still need to go to the market. However once they get rid of Ellerines chances are they will be taken over (supposedly OMSA could be interested), to my mind I can's see the reasoning for them to buy as they thoroughly cocked up Peoples Bank when it was in their stable. Maybe the PIC should take it over on behalf of the trade unions then they can give cheap loans and all the time in the world for customers to repay their debt. I would think having been in banking that taking over a lemon like Abil could be hugely cash absorbing and a great deal of hard work to put disciplines in place especially with credit extension. This will take years to bed down and at the end of the day one may well ask the question was it worth
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Sold all my ABL in Comp on Friday lol :LHST:
Just in time, you nearly ruined your buy high sell low strategy ;D
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High lights:-
AFRICAN BANK LIMITED
(Incorporated in the Republic of South Africa)
(Registered bank)
(Registration number 1975/002526/06)
Company code: BIABL
("African Bank")
Quarterly operational update for the third quarter ended 30 June 2014, changes to the board, trading
statement and cautionary announcement
Operational performance
The Group continues to face tough trading conditions, against a deteriorating economic environment negatively
impacted by lowered GDP growth expectations, increasing inflation, and loss of customer income through
strike action and increased unemployment at 25.5% for the quarter ended June 2014, as reported by Stats SA.
ABIL customers‘ disposable income and their ability to service debt continues to be under pressure, driven by
a combination of above inflationary cost of living increases, higher relative debt servicing costs and lower
growth in their gross income.
Banking unit
Non-performing loan ("NPL") formation for the quarter ended June 2014 decreased by 7.1% from the quarter
ended March 2014. The business written post June 2013 continues to perform better than the business written
during 2012 as it more closely tracks that of 2011. This level of improvement was, in the opinion of the Board,
not adequate to achieve the targeted returns, particularly against the deteriorating economic outlook. ABIL has
therefore implemented further risk cutbacks in this reporting quarter and will continue to assess the need to
implement further risk mitigation steps as necessary. These cutbacks are expected to restore the risk yield
relationship as the pre June 2013 business rolls off. This is anticipated to result in a combined credit and
insurance claims charge of below 40% of total gross income earned by financial year 2018.
Disbursements for the nine months ended June 2014 declined to R14.1 billion, 20% lower than disbursements
of R17,7 billion for the comparable period. The lower sales are a result of risk cutbacks implemented in June
2013 and further cutbacks implemented during May and June 2014, in combination with a lower customer
credit appetite.
The average net loan size decreased to R13 331 in this quarter compared with R13 868 for the first half of
2014. Average term for the third quarter decreased to 50 months, relative to 54 months for the first half of
2014, and reduced further to 45 months in June 2014. This decline has been primarily driven by the reduction
in the maximum loan term from 84 to 60 months. Further risk cutbacks were made that are expected to
contribute to a restoration of the risk/yield relationship to less than 40% over the longer term and a reduction in
disbursements of between 17% to 22% at an average loan term of below 45 months in the near term.
Gross advances experienced muted growth of 2% to R60.1 billion over the nine months since September 2013
while performing loans have decreased by 3% to R41.1 billion over the same period. NPLs as a percentage of
gross advances remain unchanged from 31.7% at March 2014 to June 2014 as a result of lower sales and
increased write-offs as NPL migrations continue to remain at the previously reported elevated levels. The
income yield has consequently decreased to 31.7% of average advances for the nine months ended 30 June
2014 from 32.2% for the six months ended 31 March 2014 due to increased suspension of income on NPL
migration. Gross incoming yields on new business written in June 2014 have increased by approximately
1.5%.
Retail unit
Ellerine Holdings Limited ("Ellerines") recorded merchandise sales of R2.8 billion for the nine months ended 30
June 2014, a 12% decline relative to the comparative period. Retail sales were negatively impacted by further
credit risk reduction measures, lower customer demand for credit and the impact of a continuing tough
consumer environment.
Cash sales have increased by 9% to R1.3 billion compared to R1.2 billion in the comparative period. Credit
sales amounted to R1.5 billion, a 25% decline relative to the comparable period in 2013. The credit sales mix
for the nine months at 54% is significantly lower than the 63% in the comparable period.
The reduced sales volumes and its high fixed cost base continue to put pressure on Ellerines profitability which
remains loss making.
continue to believe that the ultimate outcome of the revised regulations will result in a fairer, better and
more equitable unsecured lending industry going forward, adequately balancing the interests of credit
providers, customers and regulators.
ABIL Board and Executive Committee appointments
The Board regrets to announce that Leon Kirkinis, the Group Chief Executive Officer, managing director of
African Bank and one of the founders of ABIL has resigned with immediate effect after 23 years in the
business. The Board owes a huge debt of gratitude to Leon for his vision and leadership during the growth of
African Bank and wishes him every success for the future.
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Ouch! Currently @ -63.81%
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So where are the two people who said they'd buy below R7 and the eight people who said they'd buy below R6 :LHST:
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So so glad I dont own any ABL, CML is also bound to take quite a dip now, glad I sold my CML shares in december last year.
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Now we know how low it can go
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Now we know how low it can go
lol 32c now
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And 18 months ago it was at R40 a share... Over 99% down today...
Serves as a good reminder to myself not to try pick shares. There was a radio interview when it dipped under R8 where the "expert" said it couldn't go any lower as the reserve bank would step in to keep it afloat, so it was one of his safer gambles.
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Holder of this share in the game can,t buy more as it gone below R1 :wtf:
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This share is just crazy! I almost place an order for it last night! Thank heavens I never!! :TU:
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Bought small amount 3000 only @ R1. If I lose it I will blame MoneyPenny :LHST:
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Would be interesting to know how many of the competitors had ABL in their competition portfolios, and quantity and who has taken the greatest pain from the drop in ABL's share price
Just curious
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I know that firepool and Itut had 100% in ABL.
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Just look at the bottom of the leaderboard ... some guys have less than 100K - YOU'RE FIRED :)
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Bought small amount 3000 only @ R1. If I lose it I will blame MoneyPenny :LHST:
Now you're just begging me to slap you around a bit.
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LOL . . . . just kiddin... have allready kissed the R3000 goodbye. But hey u never know. I just think how close I was to buying 100% of my portf when Abil was R6. Very close, very close actually phoned my broker and talked to him to buy. Then after discussion decided not too.
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LOL . . . . just kiddin... have allready kissed the R3000 goodbye. But hey u never know. I just think how close I was to buying 100% of my portf when Abil was R6. Very close, very close actually phoned my broker and talked to him to buy. Then after discussion decided not too.
Give that broker a bells.
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;D
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Aggggggg .. :wall: :wall: :wall:
Suspension of all ABIL and African Bank securities on the exchange operated by the JSE Limited
(“JSE”) with immediate effect and renewal of cautionary announcement
Following a statement issued by the South African Reserve Bank (“SARB”) on 10 August 2014, placing
African Bank Limited into curatorship with effect from 16:00 on that same date, the Board of ABIL has
resolved and requested the JSE to suspend trading in both ordinary and preference shares, share codes
ABL and ABLP as well as all African Bank debt instruments (ABL10A, ABL10B, ABL11A, ABL11B, ABL12B,
ABL13, ABL14, ABL15, ABL16, ABL17, ABL18, ABL19, ABLI03, ABLI04, ABLI05, ABLI06, ABLS2A,
ABLS2B, ABLS3, ABLS4, ABLS5, ABLSI1) with immediate effect. The JSE has agreed to the suspension.
Application will be also be made for the suspension of all securities listed on exchanges outside South
Africa. The Board of the Company considers that the suspension is in the public interest as the curatorship
and the other restructuring initiatives referred to in the SARB statement are likely to create two levels of
information in the market in relation to the ABIL’s securities set out above.
The full SARB statement is set out below:
[Media statement begins]
Remarks by the Governor of the South African Reserve Bank, Gill Marcus
Press Conference August 10th, 2014: African Bank Limited
Members of the media,
Ladies and Gentlemen,
Thank you all for being here today.
As you are aware from our invitation, we have called today’s press conference in connection with African
Bank Limited.
Against the backdrop of African Bank’s parent company African Bank Investment Limited’s (ABIL’s) trading
update on Wednesday, 6th August, 2014, the SARB, in consultation with the Minister of Finance, has
decided to implement a number of support measures.
These will further strengthen the resilience of the banking system as a whole, and, importantly, they will
provide African Bank with the best chance of a viable future.
As you are all aware, African Bank has received considerable media coverage for some time now. The
Registrar of Banks and his team intensified their active engagement with the management and board of
African Bank towards the end of 2012. The concerns they expressed particularly focussed on African Bank’s
impairment and provisioning policy, their rapid credit growth, and the need for a strategic rethink of their
business model.
Given these concerns, regular discussions were held by the Governors with the Banking Supervision
Department to ensure closer monitoring of developments affecting African Bank. These meetings
commenced in May 2013, and the Governors received regular reports on measures taken by the Bank
Supervision Department on the steps they required African Bank to take in addressing the concerns.
At that stage, African Bank had a capital adequacy ratio of 32%, which is above the minimum requirement.
The measures taken by African Bank as a result of this engagement included a higher level of provisioning
for non-performing loans, a review of their provisioning policy, and a rights issue that raised R 5.5-billion in
December 2013. The management was also requested to dispose of Ellerine Holdings Limited.
The problems that have beset African Bank are, in our view, largely specific to their current business model,
which does not include a diversified set of products and income streams, nor does it offer transactional
banking services. This has made African Bank and the ABIL Group uniquely vulnerable to a changing or
challenging business environment, such as currently prevails.
It is against this backdrop that the decision has been taken to introduce a range of support measures for
African Bank.
The first important measure has been the conclusion reached by the Registrar of Banks and the decision by
the Minister of Finance to place African Bank under curatorship with effect from 16.00 today, 10th August
2014.
African Bank Limited’s Board has, after due consideration, advised the Registrar that it does not oppose
curatorship and has taken the appropriate resolutions to facilitate the process.
The curatorship provides the legal framework within which the necessary initiatives to enable resolution can
take place. The Minister has appointed Mr Tom Winterboer as the curator. He will be responsible for African
Bank with immediate effect, with the full authority the law confers on the curator.
Tom Winterboer is the financial services industry leader for Africa and a member of the global financial
services leadership team at PwC. You will be provided with his CV as part of the press pack and I would like
to introduce him to you now. Mr Winterboer will be assisted in his task of securing a viable future for African
Bank by a team of experts, including Mr Peter Spratt and Mr David Gard from PwC London. Mr Gard, who
has been appointed as Senior Advisor, Business Restructuring, has been working with African Bank for the
past four weeks. He will take particular responsibility for assisting the curator on the restructuring plan. Mr
Spratt has been appointed as Special Advisor to the curator. Other members of the team will be announced
by Mr Winterboer in due course. He will also ensure that there is a specific help line to answer questions that
clients of African Bank may have.
The curatorship is a protection procedure which gives the SARB the legal means to create the necessary
space to implement a resolution plan capable of ensuring that the business of African Bank gains a secure
perspective for the future as a lending institution with a transformed business model.
The curatorship and resolution process will:
- ensure that the regular operations and collections of African Bank continue effectively and efficiently
- identify performing loans and assets to be maintained in a good bank
- involve the purchase by the SARB of a substantial portion of the non- and under-performing assets and other
high risk loans from African Bank in order to separate them from the good bank, and also as a first step
towards resolution of the challenges associated with these assets and loans
- recapitalise the new entity by a capital raising of some R10-billion underwritten by a consortium
- provide current shareholders an opportunity to participate in the recapitalisation of the new entity and
thereby of good bank
The measures that have been taken are, in our view, in the best interest of all stakeholders, whether
depositors, shareholders, creditors, or clients.
I would now like to turn to the package of proposals that will guide Mr Winterboer in his endeavours to find
resolution.
Firstly, I want to emphasise that African Bank continues to operate during the curatorship and that Mr
Winterboer will make decisions regarding the continued granting of loans and sound banking activities
generally. African Bank continues to be open for business.
Secondly, retail depositors represent less than 1% of African Bank’s creditors. We are therefore able to
make an unequivocal commitment to all existing retail depositors that their money is safe, and that they can
continue with African Bank as their bank without fear that their deposits will be frozen or lost. They will have
full access to their money in the ordinary course of business.
Thirdly, the resolution will see a private/public sector partnership. A consortium has been put together by the
private sector. The consortium comprises Absa Bank Limited, Capitec Bank, FirstRand Bank Limited,
Investec Bank Limited, Nedbank Limited, Standard Bank Limited, and the Public Investment Corporation
(PIC). The consortium has committed to underwrite a R 10-billion capital raising, and will – under the
guidance of Mr Winterboer – be engaging with shareholders and other interested parties in this regard.
Members of the consortium have also offered to provide management and technical support.
Resolution will see African Bank split into two parts:
- On the one hand a good bank, which will be recapitalised as indicated above. Let me emphasise here that the
R10-billion recapitalisation is for the good bank, which has a book value of R 26-billion net of portfolio
impairments
- On the other hand the bad book, which comprises a substantial portion of the non- and under-performing
assets, will be housed in a vehicle with the support of the SARB in order to separate these from the good
bank. As a result, the bad book will no longer form part of African Bank
o the bad book currently has a book value net of specific impairments of R 17-billion for which the
SARB will pay R7-billion
o collection against the bad book will be continued, and indeed strengthened: there is no payment
holiday for anyone owing on a loan from African Bank
Every effort will be made to ensure that collections continue with the goal of avoiding any cost to the
taxpayer arising out of this measure. A claw back arrangement will be put in place for the bad book to the
extent that performance exceeds expectations.
The proposal for the restructuring of the liabilities of African Bank is set out below:
- existing depositors, specified sundry creditors and instrument holders will be restructured and assumed by
the good bank as follows:
o retail depositors and specified sundry creditors will be transferred at full value
o senior debt instruments and wholesale deposits (excluding subordinated debt holders) will be
transferred at 90% of face value following the restructuring (the absolute interest rate will be based
on the revised face value)
o all other liabilities will remain in African Bank
- existing ordinary shareholders and subordinated debt holders will be afforded the opportunity to participate
in the good bank
- it is intended that the good bank holding company will be listed on the JSE in due course, and will include the
acquisition at fair value of the various insurance entities within the ABIL Group
An important aspect of the curatorship is that the curator has the discretion to suspend payments of interest.
While interest continues to accrue, he is expected to suspend interest payments generally with immediate
effect except for interest payments on retail deposits.
We are greatly encouraged by the active and committed response by the private sector to partner us in
seeking resolution for African Bank. We believe that the package that has been put together with the support
of the consortium is workable and substantive. Shareholders will have an opportunity, by following their
rights in the capital raising, to participate in the recapitalisation.
We take the opportunity to repeat what we said in our statement last week:
South Africa’s banking sector remains healthy and robust. There have been no indications that other South
African banks have been affected negatively by ABIL’s trading update or African Bank’s current situation.
This remains the case following today’s announcement.
The role of banking supervisors is to make every effort to ensure that South Africa’s banks have adequate
capital, liquidity, and leverage ratios, as well as sound governance and appropriate policies. We are, and will
remain, an active supervisor. But this can never substitute for management’s role and its responsibility to
manage a bank. Nor can it remove a Board’s responsibility to ensure sound policies and practices in relation
to corporate governance, effective risk management, as well as the strategic direction of a bank.
Notwithstanding the challenges facing African Bank, government’s policy of financial inclusion is appropriate
and important. This requires sound practices, appropriate lending relating to affordability and an increased
effort to provide greater access to finance for entrepreneurs as well as small and medium enterprises. This
will continue to be the challenge for all of us going forward as we, together, continue to maintain the strength
of the banking and financial system.
[Press statement ends]
A further announcement will be released as soon as the impact of the media statement has been analysed
by the ABIL Board and after consultation with the SARB.
Holders of ABIL equity instruments and African Bank debt instruments should therefore exercise caution in
dealing with their securities until a further announcement is released.
On behalf of the Board
Midrand
11 August 2014
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Uhh not sure what does this mean now for people holding existing shares? ???
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It is actually very easy to understand.
If you hold ABIL shares, the total value of your holdings are now Rnil.
Eish.
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lol shame
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could be a while before the suspension is lifted - depends on what the criteria is for the suspension to be lifted - at worse I recon it is when the underwriters get out of the deal - not sure how they could agree to this (seemingly so easy). Abil will look completely different then.
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It is actually very easy to understand.
If you hold ABIL shares, the total value of your holdings are now Rnil.
Eish.
And we are 100% sure my R3000 is now = Zero ? :'(
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Hopefully when they offer current shareholders rights to new Good Bank, A person can sell the rights.
Must say for our SARB to come up with the names, Good Bank and Bad Bank ? must have taken a lot of thought. What next, a colour in competition to work out the new logo's for Good Bank and Bad Bank.
Ag well, will right it down and out in my Bransby and 1time file. File getting big there jaDEB ... :frustrated:
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Must say for our SARB to come up with the names, Good Bank and Bad Bank ? must have taken a lot of thought. What next, a colour in competition to work out the new logo's for Good Bank and Bad Bank.
I have my crayons ready :D
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Hopefully when they offer current shareholders rights to new Good Bank, A person can sell the rights.
Must say for our SARB to come up with the names, Good Bank and Bad Bank ? must have taken a lot of thought. What next, a colour in competition to work out the new logo's for Good Bank and Bad Bank.
Ag well, will right it down and out in my Bransby and 1time file. File getting big there jaDEB ... :frustrated:
no, AFAIK that lame arsed ABL board came up with the names, as stated in their 6Aug sens
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Thanks Bundu,
my apologies to Gill Marcus.
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It is actually very easy to understand.
If you hold ABIL shares, the total value of your holdings are now Rnil.
Eish.
And we are 100% sure my R3000 is now = Zero ? :'(
Just trying to understand: if ABIL lists again, you should still have some value for your holdings, right?
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Apparently not, (although I hope so). You will receive rights to buy shares in the new "good" bank. I hope that you can sell your rights. Suppose we will have to wait for further announcement.
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some said that ABIL Shareholders will not lose their shares
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Do u not think it is a bit late Mr Moody, even the :frustrated:' ing hamster know it, damn, and you get paid to do this.
:wall:
Moody's Downgrades African Bank
AFRICAN BANK INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registered bank controlling company)
(Registration number 1946/021193/06)
Ordinary share code: ABL ISIN: ZAE000030060
Preference share code: ABLP ISIN: ZAE000065215
(“ABIL”)
and
AFRICAN BANK LIMITED
(Incorporated in the Republic of South Africa)
(Under curatorship)
(Registered bank)
(Registration number 1975/002526/06)
Company code: BIABL
(“African Bank”)
MOODY’S DOWNGRADES AFRICAN BANK’S LOCAL AND GLOBAL CREDIT RATINGS
ABIL announces that Moody’s Investors Service (“Moody’s” or “the agency”) has, on 12 August 2014,
downgraded African Bank Limited’s local national scale issuer ratings to Caa2.za/Not Prime.za from A3.za/P-
2.za and its global senior debt and deposit ratings to Caa2/Not Prime, from Ba1/Not Prime. In addition, the
long term global and national scale ratings have been placed on review for a further downgrade.
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 (SARB) on 10 August 2014 that it placed African Bank under curatorship. 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.
13 August 2014
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hehe!
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Dit is van die dele waarna gekyk moet word – dat van die aandeelhouers oorskuif (na die nuwe entiteit wat geskep gaan word) en dat as ’n mens ’n uitgifte (vir die nuwe entiteit doen), hulle wel sal oorkom. Daar is wel die R10 miljard-onderskrywing (van ander banke) en hopelik kan ’n mens hulle die geleentheid gee om weer in ’n goeie bank in te kom.
Watch this Space - Hope I am wrong. The BEE portion (Share Holding) moves over and all other share holders only get rights to buy in again.
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Ek verstaan nie die Afrikaanse besigheidswoorde so lekker nie. Is uitgif 'n share?
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Uitgif is "Rights"
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As I understand it - and I don't know if I am right - Abil as we know it is gone forever. It will be replaced by a new "good bank" taking over the Abil business worth anything, and a "bad bank" taking over the mess. The only value that Abil shares have is that it will afford shareholders a right to buy shares in the new "good bank" entity, when the new entity issue its shares (uitgifte van nuwe entiteit). The value for shareholders thus will be a function of the worth of the "good" business in the new "good bank". The share issue of the new "good bank" has been underwritten by the R10 billion from the other banks. This in my opinion means that if you do not invest further monies (by exercising the rights and buy shares in "good bank"), the chance of recovering any value from your current shareholding will be virtually nil.
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Yes, I also read it like you have it. Except maybe the rights might have a value, i.e you can sell your rights to buy shares in the new bank.
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Junior bondholders will see their investment converted into equity. More dilution of new listing
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Maybe the R3k would have been better at a casino 8)
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Thanks Patrick. :wall: Will do so.
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Abil suspended shares were removed from JSE today.
Does it mean shareholders finally say goodbye to their investments?
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Link courtesy 'The darkside'
African Bank: How I LOVE me a bailout. (http://www.rollingalpha.com/2014/08/11/african-bank-how-i-love-me-a-bailout/)
Why This Is Great News For Shareholders
The artist formerly known as African Bank will now be three entities:
A Good Bank (with the good performing loans)
A Bad Bank (with the bad loans)
An Old Bank (with whatever is left of African Bank, including the interest in Ellerines) – at least, so I gather.
Extract, but read all..
As I read it, here are all the ways that the new shareholders will benefit:
They can take up the rights offer in the Good Bank, which is ring-fenced from the bad loans (now in the Bad Bank) and Ellerines (in the Old Bank). So their money will be pretty safe. And they’ll get the upside when the Good Bank eventually re-lists.
That upside could be significant – because all the stuff that was concerning about the Old Bank (Ellerines, the business model, the non-performing loans) will now be a problem of the past. The Good Bank is going to be all about performing loans and so forth.
As for the bad loans – there’s a guaranteed R7 billion for anyone that takes up shares in the Good Bank (I think that’s where the R7 billion will go). And if there is better collection (including interest rates), then that will be passed along. So there’s upside there.
The bondholders are taking some of the hit (specifically, 10% of their face value) – so there’s a win.
And once the Old Bank is wound up, there will possibly be some residual payout. After all, Ellerines needs to be sold off. And the New Bank will buy the insurance units. But who knows – perhaps there really won’t be anything left.
In summary, if you managed to buy shares on Thursday and Friday, then you’re probably in for a little windfall. If you take up the rights offer, then you’ll have:
Shares in a good bank, with none of the really bad risks (and your share purchase was really just paying for the right to participate in the rights offer).
Possibly a bonus payout from the bad bank.
And even if you don’t do the rights offer, hopefully a little payout from the old bank.
It’s good news. Especially if you’re a new shareholder.
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Interesting – but unfortunately I am not so optimistic about this as you. It is impossible to say the new shareholders will benefit.
May benefit? perhaps. Could lose more? probably.
No investor bought ABIL shares on Friday – only speculayers did.
Some you win, some you lose – also in this case.
Value cannot be created out of nothing, which means that after the split the value of good + bad + old will be the same as what the total value of ABIL is now. The value of the right to buy shares in new good bank must therefor be calculated as the value of the new good bank plus the negative value of the new bad bank, plus the negative value of the bankrupt old bank.
Holders of shares in ABIL can:
1 sell their rights to buy shares in new good bank – and the value of those rights will still be determined, but will most definitely take into account the negative values of the others - there is no free lunch; or
2 will have to invest more money so as to buy the shares in new good bank.
It is true that the “value” of the rights might be more that the final 30c per share, but it could also be less.
The only chance that shareholders have of not loosing more than they already have, is if the market over reacted on Friday and the value is in fact more than the 30c closing price. Speculators who bought in at these values obviously are in the same position.
My definition of good news is slightly different.
Let’s see what happens to the ABSA shareprice on Monday when their clients en masse withdraw their funds from the money market account where they had to take a write off due to this debacle.
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Hell no, I am certainly not optimistic, never had the stuff and just posted the link. The only ameliorating scenario would be (as you hint), a very low i.e. attractive rights offer where the upside potential outweighs the downside. They will need to revisit their business model though.
BTW. Capitec was downgraded by Moody's - not justified.
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This whole fiasco with African Bank can only be seen as diabolical.
What is going to be moved into the "good bank" - African Bank did not run a retail banking operation so they have little or no deposits from the general public. The lending policy of the bank was doomed from inception, however they followed the noise made by government to lend to the mass market, their failing - they got no protection guarantees from government to cover them for this eventuality
If there was any upside I doubt whether Coronation would have dumped almost 70% of their holdings on Thursday and Friday. I can't recall in my 40 years in banking of any bank that has been put into curatorship or even more recently business rescue that has come out of the wringer frsh and clean and ready to go banking again.
The biggest unknown is who was buying up the dumped Coronation shares and other fund managers who were getting themselves out of the pickle at any cost. I also think the PIC are up the creek as they did not seem to reduce their holdings.
There are constantly noises by political parties that banks should be nationalised here is an ideal opportunity for the PIC to buy the bank and then try and run it and get it out of its dilemma - but they won't goes this route because they can see any SIU is poorly managed and merely consumes tax payer monies
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'F*** the poor!' is the message from a top executive at African Bank (http://www.timeslive.co.za/local/2014/08/17/f-the-poor-is-the-message-from-a-top-executive-at-african-bank)
In a terrifying glimpse this week into the dark heart of unsecured lending in South Africa, a former top executive of African Bank, Tami Sokutu, scorned the poor who were sucked into debt by easy loans from his now failed company.
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At least he is honest about it - the aNC have been doing this since 1994 but just haven't been bold enough to say it as it is :LHST:
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Would Abil pref shares be treated differently to ords ?
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'F*** the poor!' is the message from a top executive at African Bank (http://www.timeslive.co.za/local/2014/08/17/f-the-poor-is-the-message-from-a-top-executive-at-african-bank)
In a terrifying glimpse this week into the dark heart of unsecured lending in South Africa, a former top executive of African Bank, Tami Sokutu, scorned the poor who were sucked into debt by easy loans from his now failed company.
Money can't buy you class...
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Yip, that is what you do, use the last bit of investors money that is left. employee :wall: some people :wall:, let them run around doing cr :wall: p. Then at the end say, althought millions was spend looking at what went wrong, nothing is left... Same old Bullsh :wall: t every frikkin :wall: time. :wtf: :frustrated: :frustrated: :frustrated: :frustrated: :frustrated: :frustrated: :wtf:
SOUTH AFRICAN RESERVE BANK ("the SARB") INVESTIGATION INTO AFRICAN BANK
On 10 August 2014, the SARB released a statement, placing African Bank into Curatorship. The SARB has today
released a further statement relating to the institution of a formal independent investigation into African Bank, in terms of
section 69(A) of the Banks Act No 94 of 1990.
The full SARB statement is set out below:
"The South African Reserve Bank (SARB) recognises the importance of investigating the circumstances that gave rise to
African Bank being placed under Curatorship on 10th August, 2014. It has therefore decided to institute a formal
independent investigation in terms of section 69 (A) of the Banks Act No. 94 of 1990. The Registrar of Banks has,
pursuant to this decision, appointed Adv. JF Myburgh as Commissioner in terms of the said provisions with effect from
30th August 2014. He will be assisted by Vincent Maleka, SC, and Brian Abrahams. Notice to this effect will appear in the
Government Gazette of 12 September 2014.
Advocate Myburgh will, among other matters, investigate the business, trade, dealings, affairs, assets and liabilities of
African Bank. These duties will be performed as outlined in section 69(A) of the Banks Act and in terms of sections 4 and
5 of the Inspection of Financial Institutions Act 1998 (Act NO. 80 of 1998)
The Commissioner is required to complete this investigation within a period of five months from the date of appointment.
A written report will be required to be submitted within 30 days after the completion of the investigation.
The report should indicate, among other things, whether or not:
1. it appears that any business of African Bank was conducted recklessly, negligently or with the intent to defraud
depositors, other creditors or any other person for any other fraudulent purpose;
2. the business of African Bank involved questionable management practices or material non-disclosures, with the
intent to defraud depositors or other creditors. Should this appear to be the case, the Commissioner should
indicate whether any person party to such questionable practices has been identified."
The ABIL Board of Directors has committed to fully cooperating with the Commissioner on the matter.
All queries with regard to the Commission should be addressed to Hlengani Mathebula, Head of Group Strategy and
Communications at the SARB on +27 12 313 4210 or +27 82 448 9219.
On behalf of the Board
Midrand
2 September 2014
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Shame, poor Leon has to sell his R60 mil house now: http://www.iol.co.za/business/companies/ex-african-bank-boss-firm-puts-r60m-home-on-sale-1.1745469#.VAltcMlutTc
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http://www.fin24.com/Companies/Financial-Services/African-Bank-rot-may-be-worse-than-anticipated-20140905
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Verster explained that the South African Bonds were not trading. “They are part of the suspension, similar to the Common Equity. Some money market funds and income funds have adjusted their evaluation or frozen that part of their portfolio, so some investors, when they request a redemption from an income fund of R100, might get R93 and R7 will be held behind, because that is the African Bank exposure. No one really knows the true value, but I would guess it would be close to 90% of the previous value.” In the whole reorganisation, there’s a good bank and a bad bank, said Verster. “The bad bank gets bought out of Abil at R7bn for R17bn loan book. That leads to an impairment of R10bn in the listed entity, so the listed entity is insolvent.
“There is also a buy-out of the good book of R26bn from the listed entity into a good bank, so there’s an asset of 26. However, the debt holders also go long, which is 90% of R40bn of debt. That is R36bn, so you have 26 of loan book and 36 of the liability. That leaves a 10% funding shortfall. That’s where the consortium of banks are coming in.”
“The banks will want to exit because they are not in the business of owning stakes in other banks,” he said. “The good bank will then list and allow that consortium to be replaced as the shareholder, by public shareholders, so there’s quite a process still to come. In that whole process there is some value attached to the current Abil shares …”
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Current road ahead on Abil = http://today.moneyweb.co.za/article.php?id=775824&cid=2014-09-12#.VBKB50kaLIU
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Wow, lots of new information here, thanks ABL, do people actually get paid to to this cr@p with the little money that is left.
AFRICAN BANK LIMITED
(Incorporated in the Republic of South Africa)
(Registered bank)
(Registration number 1975/002526/06)
Company code : BIABL
In Curatorship
(“African Bank” and the “Bank”)
Further cautionary announcement and continued suspension of all debt securities of
the Bank and equity securities of ABIL
1. Investors are advised that the curatorship of the Bank and the restructuring initiatives in respect
of ABIL, as announced in a statement by the then Governor of the South African Reserve Bank
(“SARB”), Ms Gill Marcus, on 10 August 2014 (“the SARB statement”) remain ongoing.
2. During this time, trading in both the debt securities of the Bank and the equity securities of ABIL
will continue to remain suspended. Investors are therefore advised to continue to exercise caution
when dealing in the debt securities of the Bank and the equity securities of ABIL until further
detailed announcements are made.
3. Investors are referred to the ABIL and African Bank announcements released on the Stock
Exchange News Service (“SENS”) on 10 December 2014, respectively entitled "Renewal of
cautionary announcement and continued suspension of all securities of ABIL, an update on the
business rescue process in Ellerines and update on the release of ABIL’s annual results for
financial year ended 30 September 2014” and "Renewal of cautionary announcement, further
update on the curatorship of African Bank and proposed restructuring measures”.
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Interesting new article @ http://afkinsider.com/88535/african-bank-story-laws-lending-south-africa/.
Especially this:
This deal essentially involves giving secured creditors (those with collateral) 90 percent of the value of their loans and giving all other lenders and equity-holders nothing at all. In the meantime, the story of African Bank’s bad balance sheet continues, and it doesn’t look like the unsecured lenders will find much sympathy for their concerns. For now it’s Hobson’s choice, it’s either [the deal] or nothing, and if they don’t take the deal they’ll go into liquidation, which would cause a lot more pain, more unemployment… You don’t want that knocking on the door of the South African economy as a whole.