Abil, as it is widely known, has been hammered by spiralling bad debts as its core market of low-income borrowers come under strain from rising unemployment, food and fuel costs.
Its latest woes wiped more than half the value off the share price, which hit the lowest level since 1997 on widening concerns about its ability to ride out the economic downturn. By close of trading yesterday the stock was down 60.7 percent at R2.70.
The lender said it would also need to tap shareholders for at least R8.5bn, its second big capital call in about a year.
"We have really been spending a lot of money on this company, it's almost like a bottomless pit now and we need to find a way of closing it," said Dan Matjila, the chief investment |officer of the
"That can only happen if we have a leadership that has a clear plan to get the company out of this," he said.
The PIC, which manages funds on behalf of government employees, is the second largest shareholder in Abil, with a 15 percent stake.
Abil said it would meet with "key funders" and shareholders to make sure it could avoid a liquidity crunch. It also said it had appointed an independent adviser to review its underwriting, collections and provisioning methods.
The bank was due to hold a conference call later yesterday, and said |it had appointed Pricewaterhouse-|Coopers to assist in its restructuring, adding it would make an announcement by the end of the month about its plans to overhaul its business.
Abil has been looking to sell its |furniture retailing unit,
Chief financial officer Nithia |Nalliah was appointed acting chief executive.
Abil said it expected a headline loss of at least R6.4bn for the year to the end of September versus a profit of R365 million the previous year.
It said it would have to hike its bad debt provisions by R3bn and was |suffering from higher-than-expected bad loans, pushing it to a loss.
In an effort to clean up its books, it said it would ring-fence its "good" loan book and was exploring options to isolate itself from its "bad" loans. |- Reuters
Most Popular Stories
- Bently Creates Alabama Small Business Commission
- Is Alibaba's IPO Price a Fairytale?
- Kardashian: Kanye Never Told Fan in Wheelchair to Stand Up
- Los Angeles Angels Clinch Playoff Spot
- U.S. Producer Prices Held Steady in August
- When to Say No to Investors, Yes to Mentors
- U.S. Tobacco Growers Lose Last of Price Supports
- Scottish Leaders Scramble for Votes on Independence
- Sanctions Push Russian Ruble to Historic Low
- ISIS Grew Strong as al-Qaida Weakened