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African Bank CEO paid salary as lender collapsed

Johannesburg - Leon Kirkinis, former chief executive officer of African Bank Investments, which failed in August, received 3.6% less in compensation for 2014 than the year before his bank collapsed.

Kirkinis, aged 55, received a total of R2.11m for the fiscal year ended September, according to annual financial statements published online on Thursday by African Bank. A year earlier, his total compensation was R2.18m, according to the statements, which noted that the compensation was approved before the bank failed.

African Bank made a loss of R9.3bn in the fiscal year through September, compared with a restated loss of R5.9bn in the previous 12-months, the lender said on Thursday in a separate statement. Kirkinis resigned on August 6 when the lender first forecast the record loss. The share price plummeted and the central bank stepped in to attempt to rescue the lender, suspending all securities. Bond holders alone have almost R45bn at risk.

“He has lost a significant amount personally, but the losses inflicted on other investors, which have not yet been stemmed, under his watch have indeed been unconscionable,” said Jean Pierre Verster, an analyst at 36ONE Asset Management, which holds African Bank stock.

‘Personal Responsibility’

The bank expects to report a loss of as much as R2.8bn for the six months through March and doesn’t anticipate “substantively improved operational results” in the year ending September, it said on Thursday.

African Bank should have withheld pay from Kirkinis and he should be offering to return money, said Simon Brown, chief executive officer of JustOneLap, an investment and trading website. “A failing company really should cut exec’s pay, but they would likely claim that pay is fixed,” he said.

Kirkinis suffered financial loss because his African Bank shares became worthless, Brown said. “But the bigger picture is about executives taking personal responsibility when things go pear-shaped.”

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