Guiding consumers since 2009

SARB to investigate Abil further

By Staff Writer
By Ashleigh Brown, journalist, Justmoney
 
The South African Reserve Bank (SARB) has set up further inquiries into African Bank Investments Ltd (Abil). SARB said it will specifically investigate the circumstances that gave rise to collapse of Abil. 
 
“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,” said SARB in a statement this week. 
 
The Commissioner will investigate the business, trade, dealings, affairs, assets and liabilities of Abil. The investigation will be completed within five months from the date of appointment. Furthermore, a written report about the findings of the investigation is required. This report will be submitted 30 days after the completion of the investigation. 
 
Spotlight on NCR 
 
Justmoney reported that the Debt Counselling Industry portal (DCI) had slammed the National Credit Regulator (NCR) for failing to properly investigate Abil’s reckless lending practices. 
 
“Over the past few years, debt counsellors have lodged thousands of complaints, many relating to reckless lending and breaches against the NCA against the country’s major credit providers, including African Bank. These complaints have repeatedly been sent to the Regulator who has chosen to ignore them and the plight of desperate consumers,” said Deborah Solomon, founder of the DCI. 
 
The SARB paid R7 billion for Abil’s bad loan book and the bank was split into two. The Reserve Bank bought the “bad” bank, and the “good” bank received a R10 billion capital injection. 
 
The capital injection was underwritten by Standard Bank, Nedbank, Absa, FirstRand, Investec, and the Public Investment Corporation.
 
The fall 
 
On Thursday 7 August, Abil’s shares plummeted by 80%. This was after the bank’s quarterly update was released on Wednesday 6 August and its CEO, Leon Kirkinis, resigned. The SARB said that Abil’s losses were in large part due to its unique business model. 
 
“Credit losses and the drain on its resources have resulted, among others, from the inability of its furniture chain, Ellerines, to operate profitably. Abil is the only South African bank to operate a furniture chain,” said SARB. 
 
The SARB went on to state that Abil’s unique business model also left it vulnerable to changes. 
 
“Unlike most other banks in the country, Abil’s unique business model does not include a diverse set of products and income streams, nor does it offer transactional banking. This makes it unusually vulnerable to a changing or challenging business environment.”

Recent Articles

Featured Fuel rewards programme – how to fill up on petrol and points

South Africa’s volatile economy has often meant that factors like the fuel price bear the brunt. This year alone the country’s fuel price has fluctuated by between R1.50 to almost R3, which has put increasing pressure on motorists. That said, many of the bigger South African brands have provided some relief by way of fuel rewards programmes.

Are you entitled to your spouse’s pension after divorce?

Divorce means more than just parting ways with your partner. It may also involve parting ways with your assets. The Divorce Act states that your retirement fund forms part of your assets. This means that it will be considered when dividing up your assets.

Retrenched – which payments are you entitled to?

In the current struggling economic climate, retrenchments are a regular occurrence and not everyone survives the cut. If you find yourself on the receiving end of retrenchment you may have questions about the payments that are due to you.

Do you want to settle your debt?

You may be considering settling your credit account, whether it’s a credit card or various store accounts, now may be as good a time as any. This especially if you have saved, or you received a tax return or salary bonus. 

Deals

Builders Black Friday Special

Price: R5000
When: Until 29 November 2019
Where: Online

Café Rousse Monday Special

Price: Available on request
When: Mondays
Where: Nationwide

Skye Bar Mojito Special

Price: R55
When: Until 31 December 2019
Where: Johannesburg