This Is What Led To The Collapse Of African Bank

The report, which was commissioned by the South African Reserve Bank (Sarb) following Abil’s collapse in 2014, is only scheduled for official release next Thursday, but sources who have seen the report claim the findings are somewhat damning.

According to sources who spoke to Bloomberg, advocate John Myburgh – head of the commission and author of the report – heavily criticises the bank’s governance structures and reportedly raises questions about whether or not the bank’s board members were adequately qualified to be on the board and effectively advise former CEO Leon Kirkinis.

Myburgh found that when part of the bank crashed in August 2014, three quarters of the bank’s board of directors had not a grain of banking experience prior to taking up their places on the board.

The commission’s terms of reference, established by former Sarb Governor Gill Marcus, were to investigate the group for reckless, negligent and potentially fraudulent activities.

Myburgh also found that criminal activity played no role in the bank’s demise and as such, he didn’t recommend that charges be brought against anyone.

The bank was put under curatorship and subsequently split into a good and bad bank, with the good bank relaunched a month ago as a diversified retail bank.

It was reopened with the support of the Public Investment Corporation, a consortium of banks and the Sarb, with a R10-billion equity base and R24 billion in cash.

The new bank’s CEO Brian Riley believes that management will get it right this time.

“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,” Riley was quoted saying in a Business Day report.

“We intend to provide more value than 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.”

Last month former Abil board directors lodged papers in the Pretoria High Court claiming that they weren’t liable for R2,03-billion worth of damages being claimed by minority shareholders who lost money in stocks when the bank collapsed. According to the former directors, they shouldn’t be liable for the damages because their fiduciary duty is solely to the company as opposed to shareholders.

source: Destinyconnect


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