The South African Reserve Bank (SARB) has set up a formal independent investigation which will look into the business trade and dealings of African Bank.
This after the central bank placed African Bank under curatorship on 10 August.
In a statement on Tuesday, the central bank said that Advocate JF Myburgh was appointed as commissioner of the investigation and will be assisted by Vincent Maleka SC, and Brian Abrahams with effect from 30 August 2014.
"Advocate Myburgh will, among other matters, investigate the business, trade, dealings, affairs, assets and liabilities of African Bank. These duties will be performed as outlined in section 69 (A) of the Banks Act and in terms of sections 4 and 5 of the Inspection of Financial Institutions Act 1998 (Act NO. 80 of 1998)," said the SARB.
The commission will have five months to complete the investigation with a written report required to be submitted within 30 days after the completion of the investigation.
The report should indicate whether or not it appears that any business of African Bank was conducted recklessly, negligently or with the intent to defraud depositors, other creditors or any other person for any other fraudulent purpose.
The report should also indicate whether or not the business of African Bank involved questionable management practices or material non-disclosures with the intent to defraud depositors or other creditors.
"Should this appear to be the case, the commissioner should indicate whether any person party to such questionable practices has been identified," noted the bank.
Last month Cabinet welcomed plans by SARB to restructure African Bank Limited (Abil).
"Cabinet welcomes the plans by the SARB and a consortium of investors from the financial sector to restructure Abil. This will assist to appropriately safeguard retail depositors and minimise losses for investors in Abil," said Cabinet following its fortnightly meeting.
The central bank had said that African Bank will receive a R10 billion capital injection by a range of banks such as Capitec Bank and Investec Bank Limited, which have formed a consortium to underwrite the R10 billion capital raising.
The Reserve Bank said it would pay R7 billion of African Bank's bad loan book. The bad loan book comprises a substantial portion of the non- and under-performing assets.
The bad book currently has a book value net of specific impairments of R17 billion.