African Bank Shareholders Agree to Support Fund-Raising Efforts

African Bank Holdings Ltd.’s shareholders will provide as much as 8 billion rand ($480 million) in financial-backing to help the South African lender raise funding.

“To build a robust and sustainable long-term operating model, African Bank needs to re-establish itself as a reliable and accepted counter-party in the domestic wholesale-funding market,” the Johannesburg-based lender said in a statement Monday. The backing will be provided for about three years, starting on Dec. 1.

African Bank has relied on retail deposits to finance lending since resuming operations in the wake of African Bank Investments Ltd.’s collapse in 2014. The lender was bailed out by the industry and its shareholders including the South African Reserve Bank, the Government Employees Pension Fund and the nation’s six largest lenders.

While African Bank “does not immediately require any additional wholesale funding or increased liquidity,” the support should provide further comfort and confidence to South African funders,” Chief Financial Officer Gustav Raubenheimer said in the statement. It doesn’t plan to sell listed debt securities this year, he said.

Should African Bank decide to raise funding, investors will cover any shortfalls in demand at market-related rates. The bank will continue to focus on diversifying funding sources across its retail-deposit book, Raubenheimer said.

©2020 Bloomberg L.P.

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