Corpcapital Limited
(Registration No. 1983/011384/06)
Incorporated in the Republic of South Africa
Share Code: CPA
ISIN Code: ZAE000034260
("Corpcapital")
ANNOUNCEMENT OF INTENTION TO APPLY TO DEREGISTER THE BANKING LICENSE OF
CORPCAPITAL BANK
The Corpcapital Group's activities are currently divisionalized into
Investment Banking, Corporate Finance, Property Asset Management & Finance,
Specialised Finance, Trading & Arbitrage and Financial Products.
Through its wholly owned subsidiary, Corpcapital Bank, the Group embarked on
a strategy to develop a deposit taking franchise. This represents a small
part of the Group's activities and does not currently contribute positively
to earnings. This strategy has absorbed considerable Group financial and
executive resources.
Having carefully reviewed prevailing and projected future market conditions
and following consultation with regulators and external advisors,
Corpcapital Bank has resolved to cease taking deposits, curtail certain
associated trading activities and, in due course, apply to the Registrar of
Banks for deregistration of Corpcapital Bank.
All of the other activities of the Group will continue. The decision will
not affect the Group's Investment Banking, Corporate Finance and Property
Asset Management & Finance activities. Certain Specialised Finance and
Financial Products divisions will re-organize their activities so that they
are efficiently funded, as needed, through third party financial structures.
The decision reinforces Corpcapital's focus on its core competencies which
are Principal Investments, Advisory Services and Asset Management, across
the full spectrum of equity, property and debt markets. These competencies
do not depend on deposit taking or the curtailed trading activities.
In consequence of implementing the decision:
The sustainable cost base of the Group will be significantly reduced,
particularly infrastructural costs necessary to meet current and increasing
regulatory requirements.
Closure costs are expected to be less than R10 million which will be
ameliorated by sustainable cost savings with the result that headline
earnings will not suffer any appreciable adverse affect.
No material impairment to the carrying value of assets is anticipated.
Consultation with affected staff has commenced.
The Bank will communicate individually with its depositors, ensuring
certainty in that they will be paid in full on due date.
Relationships with all other clients and counter-parties will continue
unaffected.
Corpcapital Bank has always been and remains highly solvent and well
managed. It can and will meet all obligations towards depositors as and
when they fall due. After all deposits have been repaid, application will
be made to the Registrar of Banks to deregister Corpcapital Bank. The
decision has been taken in consultation with and with the approval of the
South African Reserve Bank and the Registrar.
The decision will release capital and liquidity as well as executive
resources for the Group to grow its core business aggressively thereby
further improving its return on equity.
It is anticipated that market concerns about liquidity and trading risk as
well as the erroneous perception that Corpcapital depends on and is
primarily involved in deposit taking activities, will be removed.
Corpcapital is satisfied that its action is the correct response to
unprecedented changes in the small bank sector and will have the long term
effect of enhancing the Group's performance, maintaining its record of solid
growth and re-establishing its investment rating.
Rosebank
8 May 2002
Lead sponsor Joint sponsor
Boe Securities Corpcapital Corporate Finance
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