Bailed-out South African lender African Bank said on Friday it would no longer buy an insurance business from its parent African Bank Investments Ltd (Abil), after a court order obtained by Abil shareholders delayed the deal.
The deal had been announced in September as African Bank sought to assume control of a business crucial to its own operations. But Abil shareholders, demanding more details about the insurance unit’s value, last month won a High Court order blocking a meeting of creditors that would have considered the deal.
Abil, which buckled in August last year under the weight of risky loans to low-income borrowers, said on Friday the deal to buy the insurer had lapsed.
Abil had applied for protection from creditors in June. Its banking operations were bailed out by South Africa’s central bank last year, the deposits of clients guaranteed, and a curator or administrator appointed to place healthy assets into a “good bank”.
Abil then announced it planned to sell its Standard General Insurance business (Stangen) to African Bank for 1.38 billion rand ($105 million), where it would form part of the “good bank” that would continue operations.
“As a consequence of the fact that certain of the suspensive conditions were not fulfilled by the relevant date, the curator wishes to announce that the agreement regarding the acquisition of Stangen by African Bank has lapsed and will be of no further force and effect,” said African Bank in a statement.