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JOHANNESBURG Aug 19 South Africa's financial
regulator said on Tuesday it had given some investment funds the
go-ahead to divide up assets they hold in troubled African Bank
to limit new investors' exposure to the lender's bad
Earlier this month, the bank commonly known as Abil received
a $1.6 billion bailout by South Africa's central bank as bad
debts soared among its core market of low-income borrowers.
The Financial Services Board (FSB) said the move would
impact collective investment schemes, which pool investors'
money in funds run by professional managers.
"The move seeks to assist managers to segregate the less
liquid Abil assets within their portfolios from the remaining
assets and in so doing limit new investors into the fund from
exposure to the Abil debt," the FSB said in a statement.
The FSB said should collective investment schemes choose to
create the "side-pocket" funds, existing unit holders would have
units in two funds, the original and the secondary fund.
The FSB said it had received applications for side pocket
portfolios for 50 funds exposed to Abil at the close of business
on Aug. 18.
Abil ran into trouble after years of aggressively pushing
high-margin loans that are not backed by collateral to
low-income earners. But high levels of household debt,
unemployment and rising inflation have pressured borrowers into
(Reporting by Helen Nyambura; Editing by Joe Brock)