Sasbo Finance Union has signed a memorandum with the African Bank Investments Limited (Abil) curator Tom Winterboer ensuring that there will be no jobs lost at the bank. However, Myan Soobramoney, the national secretary of Sasbo believes that Abil is “not out of the woods yet.”
“We acknowledge that all is not well […], but there are signs that the Bank is stabilising and improving its position. We declare sincerely and openly that it is our intention to work with the Bank lead by Winterboer in ensuring that it recovers and it becomes a successful concern, as our members’ livelihoods depend on that,” said Soobramoney.
Abil jobs secured
Soobramoney explained that staff morale has been low over the past few months, and members of Sasbo working at Abil feared for their jobs, but the memorandum was welcome.
“This is a very positive development as the working environment of our members have, over the last number of months, been characterised by low staff morale, uncertainty and insecurities about possible job losses, negative media coverage and aggressively poor market sentiment towards Abil coupled with having to deal with hostile clients; all of which have made our members feel very despondent and demotivated,” said Soobramoney.
After Abil was put under curatorship, Winterboer was given the task of collecting debts, safeguarding deposits and building a sustainable banking operation that goes beyond unsecured lending.
Ellerine’s to close its doors
“It is anticipated that all the remaining stores may have to be closed. It has not been possible to obtain the funding that would be required to continue to operate the business even in its restructured form,” said in report posted on Ellerines’ website.
Ellerines was placed under business rescue just after Abil announced its troubles. However, Ellerines has been selling off its brands. Earlier this week Dial-A-Bed was sold to Coricraft, and Lewis Group is set to buy furniture retailer, Beares.
Lewis Group CEO Johan Enslin said in a statement that: “Beares is a strong, and well established brand across South Africa. The acquisition of Beares aligns with our strategy of gaining access to higher Living Standards Measures (LMS) customer groups and will also enable existing Lewis customers to migrate upwards to the Beares brand.”
How SARB managed Abil
After Abil’s collapse, the bank was split in two – the ‘good’ bank and the ‘bad’. The South African Reserve Bank (SARB) bailed out the bad bank by paying R7 billion for its bad loan book. The good bank received a R10 billion capital injection which was underwritten by Standard Bank, Nedbank, Absa, FirstRand, Investec, and the Public Investment Corporation.
The capital injection was given in order to stop any further damage to the financial sector. “The shock wave through the rest of the financial system would arguably have been much greater with potential for deposit runs and wider panic in interbank funding markets,” said Peter Attard Montalto, the executive director and emerging markets and an economist and Nomura.
However, despite the capital injection, there were still shockwaves felt throughout the sector. This resulted in Moody’s Financial Services downgrading four of South Africa’s big banks.
Nedbank, Standard Bank, FirstRand (the holding company of FNB), and Absa were downgraded on Tuesday, 19 August following the downgrade of Capitec on Sunday, 17 August. Moody’s felt that the downgrade was necessary, due to the fact that Reserve Bank had not fully protected Abil’s creditors, thus raising questions about the amount of future support the other banks could receive if they needed it.
Chronicling Abil’s problems:
NCR in hot water over Abil,
Abil pulling everyone down,
Abil trying to make a comeback,
African Bank announces R3 billion headline loss,
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