The South African Reserve Bank is forging ahead with the sale of its stake in African Bank. It is now looking for a transaction advisor to help it start looking at the feasibility of disposing the 50% shareholding the Bank acquired in African Bank when the latter came out of curatorship.
In a statement published on the Stock Exchange News Service, African Bank said SARB estimates that the sale could be completed within 18 to 24 months after finding a suitable buyer. SARB first announced intentions to dispose its African Bank stake in July last year, and estimated that this would only happen in a year or two. But at the time Deputy Governor, Kuben Naidoo said the Bank would take its time to first satisfy itself that African Bank is financially sound and that there is appetite among investors to buy its shares.
On Friday, African Bank CEO, Basani Maluleke, said SARB's exit would not affect the bank's operations in anyway. "Our investors can also be assured that we remain committed to growing African Bank's image as a trusted bank and a significant player in the banking sector."
African Bank indicated in 2019 that it was ready to fly without SARB's wings, as it has increased its operating and net profits every year since it came out of curatorship and deposits it had accumulated in its investment accounts demonstrated that it had regained customers' trust.
SARB bought African Bank shares to save the bank from collapsing after it and its parent company, African Bank Investment Limited, was placed under curatorship in 2014 due to spiralling bad debt. SARB said from the beginning that as a central bank, it was not its intention to hold to the African Bank stake over a long time.
For African Bank to come out of curatorship and trade again, SARB, together with the Government Employees Pension Fund (GEPF) and a consortium of local banks made up of FirstRand Bank, Standard Bank, ABSA, Nedbank, Capitec and Investec injected R10bn to African Bank and SARB also provided R7bn buying the bank's bad loan book. The GEPF owns 25% and the banks' consortium holds the remaining 25%.
African Bank said the other shareholders supported the SARB's decision to start the process of selling its shares. It added that SARB would continue to support the Bank as its major shareholder until the conclusion of the disposal process.