African Bank still open for business
African Bank was placed under curatorship after losing 90% of its value last week.
JOHANNESBURG - The South African Reserve Bank has moved to reassure African Bank clients that all the money belonging to retail and household depositors forms less than one percent of the bank's revenue and is completely safe.
African Bank was placed under curatorship on Sunday and will now undergo a resolution process that will see it split into so a called 'bad bank' and a 'good bank' for repaying clients.
The Reserve Bank says it hasn't yet decided if it will institute disciplinary proceedings against the board members of African Bank Investments Limited (Abil) after the financial institution lost more than 90 percent of its value last week.
The unsecured lender's share price fell from R6 to 31 cents on Friday after it announced it needed R8 billion to cover existing debt.
In the meantime the bank is open for business and Reserve Bank Governor Gill Marcus says this is to protect the more than three million clients.
She says the money is available for trade from the bank and there's no need for mass withdrawals of cash.
"The question is, are their funds are available if they want to go in and take it out, we're saying there's no need to do that. You have access to your funds, they are not frozen and are totally available. The first point that I was raised was that our concern was there is no harm done to retail depositors."
Marcus says they haven't yet decided what action should be taken against the managers who allowed the crisis to unfold.
"I think that what we would look at is the whole process over this period of time and whether there were things that could have been done better and whether there are appropriate powers in place."
The Reserve Bank says African Bank being placed under curatorship has presented government with an opportunity to realise its dream of a state bank in South Africa.
The governor says it is up to the state to decide if it wants to be part of the recapitalisation consortium and possibly own a majority share of the new venture.
"That would be something for government to consider and for people to say, Iif this is what you want to do, here's the opportunity.' There's going to a R10 billion rights offer; you can participate, you can be there, you can be a majority shareholder if that's what you would like to do."