African Bank open for business

African Bank (formerly referred to as the ‘Good Bank’) commenced business today. This followed the “final execution of the restructuring transaction of the entity formerly known as African Bank Limited (in curatorship). That entity has today formally changed its name to “Residual Debt Services Limited” (which remains under curatorship) and the new bank has likewise changed its name from K2014176899 (South Africa) Limited to “African Bank Limited” and will henceforth trade under that name,” explained the bank in a SENS announcement this morning.

The new African Bank

The bank has launched with an equity base of R10 billion, as well as a cash position of R24 billion. This means that together with the restructured wholesale funding arrangements, the bank will be able to build a track record without the need to raise additional funds for the next few years.

The aim of the newly launched African Bank is to start operating as a retail bank, and take a step back from the previous focus on unsecured lending.

Brian Riley, African Bank's CEO designate, stated last month: “We believe that we can implement an appropriate strategy with the correct tools, skill set and solid capital foundation to build the business into a successful retail Bank.”

While the bank will still offer loans to consumers, it will be diversifying its product offering to provide a wider range of financial products and services.

“We intend to provide more value than what is expected by consumers which will assist us to attract a higher-income and lower-risk customer base in addition to recovering some of the better quality customers we lost during curatorship. We will also increase the channels of connection with the bank and seek to partner with other service providers, where it makes sense,” said Riley.

New services to be offered

The new African Bank, together with Sanlam, will test the viability of offering consumers a broader range of insurance products and services within the bank. “Sanlam will bring an established and trusted brand to consumers, where FAIS accredited Sanlam representatives will provide financial advice and a range of financial solutions,” explained the bank.

These services will be offered through the African Bank branches of which there are currently just few - 400 nationwide.

“Should this pilot phase deliver the kind of value to customers that is envisaged, the long term sustainable benefits to other African Bank stakeholders must follow in due course. This strategy is part and parcel of the determination to place the customer at the centre of everything that African Bank does,” added the bank.

Furthermore, the bank has a long term goal of offering customers transactional banking services. In other words, consumers will have the ability to deposit their salaries and carry out day-to-day banking transactions.

“It will be a challenging road ahead but we believe that our ambition to become a successful retail bank will be supported by good governance and a set of values including transparency, empathy, innovation, collaboration and being profit conscious, which will build the reputation and restore creditability to the bank,” stated Riley.