Bloomberg News

Absa Identifies Suspended Executive as Head of Collections

July 27, 2012

Absa Group Ltd. (ASA), the South African bank controlled by Barclays Plc (BARC), identified the employee it suspended amid an investigation into why the lender had to set aside more money to cover rising bad debts.

Chief Executive Officer Maria Ramos said on a conference call today the bank put its head of collections on leave in relation to the probe. She declined to identify the employee by name. The Johannesburg-based lender doesn’t identify a head of collections on its website. There are no allegations of wrongdoing by the individual, and the bank is changing the way the unit is run, Finance Director David Hodnett said. Both declined to comment further.

South Africa’s Business Times reported on July 22 the bank had placed an unidentified executive on leave pending a probe into circumstances that have led it to bolster provisions for bad loans.

Absa today posted a 39 percent increase in bad debts in the first half and increased the amount it sets aside to cover souring mortgages to 52 billion rand ($6.4 billion). Last year, the lender had the lowest provisions for bad debts out of South Africa’s four largest banks. The jump in bad loans caused first- half profit to fall 9 percent and led the bank to overhaul the unit that collects loan repayments.

Tanzanian Unit

In an unrelated action, Absa also suspended the managing director of its Tanzanian unit, Lawrence Mafuru, following allegations by a whistle-blower, Hodnett said. No criminal charges have been filed against Mafuru, he said.

“We are investigating what the whistle-blower said, and we are taking it very seriously,” Hodnett said.

Mafuru said in an interview on July 23 he had been asked to leave on July 20.

“The board and the group asked me to leave to allow investigations, which I find appropriate because it’s in our policy to do this,” he said in the interview on July 23. Mafuru said he had no details of the “irregularities” the informant reported.

The Tanzanian bank head has not been accused of wrongdoing by regulators and law enforcers, Mafuru said today by telephone from Dar es Salaam, Tanzania’s commercial capital. He declined to comment further.

To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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