Abil tests South Africa bank reforms

Author: Danielle Myles | Published: 1 Sep 2014

African Bank’s (Abil) collapse may not create systemic risk in South Africa’s financial sector, but it has a long list of other consequences ranging from a bailout debate to less regulatory discretion.

The country’s financial sector has been resilient in the years before and after the financial crisis, and the last bank to experience difficulties was Saambou, which was wound down without a bailout in 2002.

It means that Abil will bring to the fore the bank resolution issues that the EU and US have been grappling with since the financial crisis.

On August 10 the South African Reserve Bank (Sarb) placed the country's biggest microlender into curatorship (a type of administration), and declared its intention to split Abil into a good and bad bank.

The Sarb’s decision to pay R7 billion ($655 million) to buy the bad bank, which is valued at R17 billion, has proven...



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