February 14, 2020 / 9:41 AM / 6 days ago

S.Africa's central bank moves to sell stake in African Bank

A cleaner walks past a branch of African Bank in Cape Town, file. REUTERS/Mike Hutchings

JOHANNESBURG (Reuters) - South Africa’s central bank has started the process to appoint an advisor to manage the sale of its 50% holding in small lender African Bank, the company said on Friday, around six years after injecting 5 billion rand to rescue it.

African Bank was hived off from its listed parent, African Bank Investments, and placed under South African Reserve Bank (SARB) control in 2014 after nearly collapsing under the weight of bad loans. SARB deputy governor Kuben Naidoo said in July it would look to sell its stake in the lender within a year or two.

African Bank said in a statement on Friday that the SARB had now issued a request for proposal (RFP) regarding the sale of its stake, the first step in the process of appointing a transaction advisor.

“The SARB anticipates that the disposal process will be completed within 18–24 months after the identification of a suitable buyer,” the statement said.

The move is a vote of confidence in the lender’s turnaround strategy, with the SARB wanting to make African Bank viable before it exits. While the bank has grappled with a decline in customer numbers, it has also increased profits.

African Bank’s other shareholders include the country’s largest lenders - FirstRand, Standard Bank, Nedbank, Capitec and Investec - and a government employee pension fund.

Reporting by Emma Rumney; Editing by Kirsten Donovan

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