It would have been unfathomable in the years leading to 2014, to think that African Bank, in their current form, would be able to present the kind of stellar perfomances they are producing lately. Even more unimaginable, would have been the idea that they would be making strategic acquisitions in the billions, once again, to support their long-term objectives. Such is the power of good governance.
The story of African Bank has often been plagued by mismanagement and notably bad transactions, since it filed for its banking license in 1975. Almost 20 years after it got its license, the bank was put under administration due to poor management, lack of effective controls and liquidity mismanagement, until it was bought by a company called Thetha Investment Group in 1998, which gave birth to African Bank Investment Limited (Abil).
A 7% BEE transaction in 2004 valued the company at just over R8.57 billion, before another series of bad deals, poor governance issues and a lack of diversification resulted in a second episode in the dock in 2014. The bank was put under administration for the second time in its history by the South African Reserve Bank to avert a crisis that threatened the stability of the banking industry. Central to the balance sheet issues Abil was experiencing was a lack of efficient cash management skills, high credit-risk tolerance, rising bad debt provisions and the R9.85 billion acquisition and de-listing of Ellerines in an all-share transaction in 2008, which the market dubbed a “Risky Marriage” from the start. Abil’s intentions for acquiring Ellerines was diversification, in what they believed to be good value at the time, despite Ellerines facing its own liquidity issues.


Abil failed to turn around Ellerines and the bank kept on hemorrhaging cash to the tune of around R70 million a month to support Ellerines stay afloat until there was no other option but to allow Ellerines to file for business rescue. The eventual collapse of Abil itself hardly came as a suprise to the market, as a string of fatal decisions at the top and an aggressive lending criteria with little collections success, doomed it to armageddon. Tim Winterboer, appointed by SARB as curator for Abil, provided a sobering assessment of the genesis of the collapse and the daunting task that lay ahead at the time, to help turn around the business.
Today, the market is witnessing the Third Coming of the banking “rascal”, the one that refused to follow banking norms and crashed, beaming with new-found confidence and a new set of governance skills. The “Good Bank” as it is affectionately known these days, is outperfoming some of the more established banks in the sector on a margins-basis. The bank is generating good returns and has been making very fascinating moves in the M&A space, to support their Excelerate Strategy 25 project that aims to see the bank become a dominant force in the sector and return back to the stock exchange boards.


Under the leadership of Kennedy G. Bungane, the bank recently released its accounts for the year ended 30 September 2022 and profitability has increased 38% to R736 million while the balance sheet remained liquid with cash reserves of R2.8 billion. A move into the SMME funding space will surely enhance the bank’s growth profile on their way to the much-anticipated listing in 2024.
Watch the space, African Bank is reborn!