After Bungane: Where to now for African Bank?

When Kennedy Bungane was appointed CEO of African Bank in April 2021, he agreed with the board and its chair, former Liberty CEO Thabo Dloti, that they would review his position after five years. Given that the five-year mark is just coming up, there should have been an orderly transition from Bungane to the next CEO — but instead, he was asked in early March to leave “with immediate effect”.

African Bank isn’t listed, but that is no excuse for the poor communication around Bungane’s departure. He was not dismissed, and he is still negotiating a severance package. The new interim CEO is Zweli Manyathi, the previous African Bank business and commercial banking CEO.

Dloti says Bungane was appointed to lead an expansion and diversification strategy to prepare the bank for listing. “He delivered on the expansion strategy, but the financial indicators lagged expectations and needed immediate attention.” None of this was mentioned in the original announcement on March 6.

Now Dloti points out that in the year to September 30 2025, as disclosed in the annual report, African Bank’s cost to income ratio rose from 58.5% to 64.1% — well ahead of any of the big six banks. Return on equity plunged from 4.3% to 2.4%, and profit after tax halved to R274m. Bad debts increased from 4.9% to 5.3%.

Dloti says African Bank needs a different skill set to derive value from Bungane’s slew of acquisitions. After a glamorous career, including rubbing shoulders with continental political leaders as head of Barclays Africa, Bungane was always going to be an unlikely choice to get involved in kitchen-sink tasks such as extracting higher fee income, lowering operating expenses and pushing faster digital transformation.

The inability to convey a clear message when Bungane departed may reflect the weakness of the African Bank board, which did not seem courageous enough to take on a banking heavyweight such as Bungane while the metrics were deteriorating.

Of the independent directors, only Spiro Georgopoulos (who ran the niche South African Bank of Athens) has front-line banking experience. There is a much higher proportion of insurance skills on the board.

Besides Dloti, other insurance heavyweights are Peter Temple, the head of reinsurer Gen Re’s life division, and the more left-field appointment of David O’Brien, a former product development actuary at Old Mutual. O’Brien was a close colleague of Dloti’s when they were climbing the Old Mutual corporate ladder.

Dloti defends the lack of traditional banking skills, arguing that the intention was never to turn African Bank into a traditional bank but rather to leverage fintech skills.

And because the top six banks — FNB, Standard Bank, Nedbank, Absa, Investec and Capitec Bank — are all shareholders, anyone with connections to them was excluded from the board. The closest is Lindiwe Dlamini, who has served as a nonexecutive director of Capitec.

When Bungane was appointed in 2021, it seemed an unlikely choice. Known to his friends as KGB, he is the archetypal Davos man and was arguably overqualified to run African Bank, still little more than a microlender when he took it over.

He spent the first six years of his working life at Standard Bank as a nuts-and-bolts retail banker, but most of his career has been in merchant banking and private equity. In his 30s, he led negotiations as head of the Association of Black Securities & Investment Professionals with then Standard Bank CEO Jacko Maree to launch the Financial Sector Charter. That set the BEE template for banks and insurers when it was launched in 2004.

Bungane was CEO of Standard Bank Corporate & Investment Banking from 2009 to 2012, before heading up Barclays Africa. He was also a partner with Phuthuma Nhleko in the Pembani private equity business, which later merged with Cyril Ramaphosa’s Shanduka Group investment holding company after Ramaphosa returned to politics.

Bungane is bound by a nondisclosure agreement and could not talk to the FM.

Dloti says the board agreed with Bungane’s strategy to diversify into business banking. It was presented to the shareholders and then marketed as the Excelerate25 programme. It was supposed to culminate in a listing of African Bank on the JSE in 2025. The board approved the next phase of Bungane’s strategy as recently as February 27.

The Reserve Bank, in an e-mail response to the FM, says it became a shareholder of African Bank while addressing a systemic risk posed by the bank’s failure in 2014. “It was never the Bank’s intention to hold the shares indefinitely … the Bank has been engaged in a process to dispose of the shares and is working with the board and management of African Bank towards an IPO.”

Nothing would have been decided without the Bank’s approval, as the 50% shareholder in African Bank. Central banks are notoriously opaque, so to get any clarity on the Bank’s influence would be difficult. But it must have made a decisive contribution to the board’s decision to change its mind on Bungane.

African Bank could not have remained as it was, Dloti says, as an unsecured lender. Nor would it have made sense to become a predominantly retail business, in which it would have little discernible competitive advantage, whether against branch-based banks such as Capitec or fully digital ones such as GoTyme Bank.

The straw that apparently broke the camel’s back for Bungane was a technical banking issue. As the only bank with a September year-end, African Bank was a guinea pig for the introduction of the new Basel III regulatory regime. It seems there were errors in the banker’s acceptance returns African Bank submitted — quite a basic housekeeping issue for any bank.

Logically, the head of regulatory reporting and the CFO should have taken responsibility for this mistake, yet neither has lost their job. The Bank has not even fined African Bank for its error yet, normal practice for banks that produce inaccurate regulatory reports. Did the error serve as a pretext to get rid of Bungane?

Dloti says Bungane met many of his goals. Over the past five years, for example, the client base has grown from 1.2-million — almost all in the high-risk unsecured lending area — to 6.3-million.

There was an unexpectedly large number of acquisitions by African Bank as niche banks came on the market.

Ubank, which primarily offers banking services to mineworkers, was the only acquisition in the retail space, and this was a bolt-on purchase for a modest R80m.

Grindrod Bank was finally acquired in October 2022 for R1.5bn, after a regulatory process that took 18 months — longer than expected. But Dloti says the acquisition has reduced the risk profile of African Bank as it operates in the secured lending market.

African Bank was recently given the go-ahead by Mpumalanga courts to seize R51m of assets from Kego Mining, which took over assets from the Guptas’ Optimum Coal business. This was a loan on the old Grindrod books.

African Bank paid more than double the R3.2bn it paid for Grindrod Bank for the Sasfin capital equipment finance and commercial property lending businesses, which took 10 months to gain regulatory approval in August 2024.

Bidvest Bank was the other bank to come onto the market, and while African Bank showed some interest, it was not prepared to pay anything like the R2.8bn Nigeria’s Access Bank was offering. Access Bank did not make it through the regulatory process, so Bidvest is back on the market. But the African Bank board has put a pause on shopping expeditions while it beds down its current portfolio.

A listing isn’t the only possible next step for African Bank. Another local bank could buy it as a bolt-on acquisition, or a global or foreign bank specialising in emerging markets might be interested.

Shareholders are becoming impatient, but an IPO will not be easy. Dloti says it will be a challenge to win over asset managers to take shares in African Bank, given its high-profile collapse as African Bank Investments under Leon Kirkinis back in 2014 — the most serious financial collapse in South African corporate history before the Steinhoff scandal.