Prudential, Namibia Asset Management Invested in Doomed SA Bank

TWO asset management firms, Prudential Namibia and Namibia Asset Management confirmed this week that their investments were exposed to the doomed African Bank (Abil) in South Africa but both firms insisted that the investments and losses were minimal.

African Bank collapsed last month and needed a US$1,6 billion bailout from the South African Reserve Bank (SARB), and was placed under curatorship.

The Namibia Financial Institutions Supervisory Authority (Namfisa) said on Wednesday it is still assessing the exposure of Namibian asset managers to losses they might have suffered as a result of the collapse of African Bank.

EXPOSURE

Eino Emvula, chief executive officer of Namibia Asset Management, said the exposure was through Coronation Fund Managers, its technical partner in South Africa.

He said Namibia Asset management has four unit trust funds out of which only one had an equity exposure to Abil.

“Only our Namibia Coronation Balanced Plus Fund had exposure to Abil equity. This exposure as at the 5 August was immaterial at 0,19% of total portfolio,” he said. He refused to say how much money may have been lost in the process saying the firm had communicated to its clients in confidence.

SORRY

But executives of Coronation in South Africa apologised for the loss to clients in an email seen by The Namibian yesterday.

“Losses have been incurred, for which we apologise. It is, however, important to consider those losses in total portfolio context. We made sure that only those funds with appropriate risk budgets invested and that exposure was contained to appropriate levels. This has been clearly demonstrated by the resilient performance of all our funds this month.

This has been a humbling experience for us. We do not like to make mistakes. Unfortunately mistakes are part of life for an investment manager. The challenge is to make sure they aren’t material and that we learn from them,” said Karl Leinberger, chief investment officer and Neville Chester, senior portfolio manager said.

PRUDENTIAL

Bernard Fick, chairman of Prudential Unit Trusts said as a manager of N$180 billion of client assets, Prudential is a substantial participant in South African capital markets.

“It will therefore not come as a surprise that our client portfolios do hold some exposure to African Bank. However, the impact on investors has been limited, due to the small exposure in each fund,” he said.

Fick said Prudential held no exposure to equity or preference shares in Abil in any of its Namibian or South African unit trust funds.

“However, our multi-asset and fixed interest portfolios do carry exposure to African Bank, as opposed to the Abil holding company, through senior and subordinated debt instruments issued by the bank,” said Fick.

He said given the very small exposure in each of the funds, the impact on investors is limited.

He said Prudential Namibian Money Market Fund holds a small amount of indirect exposure to African Bank, via the South African Prudential Money Market Fund. This exposure totalled 0,22% of the Namibian Money Market portfolio before impairments, and 0.20% after impairments.

“As a result of this small holding, the Prudential Money Market Fund was able to honour its 100% par value, and investors have not experienced any capital loss as result of the African Bank exposure,” said Fick.

Source : The Namibian

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