African Bank Limited's trading update

06 Aug 2014

The South African Reserve Bank (SARB) has noted today's trading update issued by African Bank Limited (ABIL), and the ensuing market response.

ABIL's losses are in large part due to its unique business model. Credit losses and the drain on its resources have resulted, among others, from the inability of its furniture chain, Ellerines, to operate profitably. ABIL is the only South African bank to operate a furniture chain.

The SARB continues to engage with ABIL on the challenges it confronts. Measures to resolve these challenges are currently under discussion.

South Africa's banking sector remains healthy and robust, and there have been no indications that other South African banks have been affected negatively by ABIL's trading update.

Unlike most other banks in the country, ABIL's unique business model does not include a diverse set of products and income streams, nor does it offer transactional banking. This makes it unusually vulnerable to a changing or challenging business environment.

The SARB continues to monitor ABIL's situation closely, and to engage with its board and senior management in search of viable long term solutions.

Statement issued by Hlengani Mathebula, South African Reserve Bank, August 7 2014

Click here to sign up to receive our free daily headline email newsletter