Bank sells online business
African Bank has sold its online debt management business, Interactive Debt Management, to specialist application service provider Lawyers Access Web.
The value of the deal has not been disclosed.
The business is being renamed Cyber Debt Management Services (CDM) and will be 90% held by Lawyers Access Web and 10% owned by management.
Lawyers Access Web, which already has a significant market share in the property registration and mortgage bond process through a secure electronic platform, will provide IT infrastructure and the electronic platform for CDM.
The company says CDM will focus initially on streamlining the administration order process.
"CDM has the capacity to transform the archaic document processing system used in the debt industry into a hi-tech paperless environment," says CDM MD Brett Ferguson.
The administration order industry has mushroomed in recent years largely as a result of the surge in the demand for and availability of credit. Since 2001, more than R5 billion worth of debt has fallen under the administration process involving about 120 000 debtors. Debtors who are placed under administration are blacklisted for up to 10 years, effectively taking them out of the active economy.
"The South African credit history currently has to write off, or make provision for, R1.2 billion per year in funds tied up under administration orders," says Ferguson. "This has increasingly placed administrators and creditors at loggerheads with one another over the debt repayment process."
CDM says its electronic platform will increase transparency by providing a constant flow of information between creditors, administrators and the justice department.