Final answer:
African Bank was placed under curatorship due to financial instability, resulting from poor risk management, bad loans, and insufficient capital. The situation mirrors historical banking challenges, emphasizing the necessity of regulatory oversight and proactive measures by bank supervisors.
Step-by-step explanation:
African Bank was placed under curatorship in 2014 mainly due to its financial instability. This kind of instability can be caused by several factors, including poor risk management, over-exposure to bad loans that cannot be repaid, and lack of sufficient capital to cover the bank's liabilities.
These issues reflect broader challenges faced by the banking sector, which include a bank's inability to foresee problems and act before accruing significant losses, potential bank runs where depositors lose confidence and withdraw their funds, and the political pressure bank supervisors may encounter from bank owners and politicians to refrain from taking necessary regulatory actions.
During the 2008-2009 recession, many U.S. banks faced similar financial shakiness, questioning the effectiveness of regulatory oversight. The crises during this period and before illustrate the precarious nature of banking without adequate regulation and the importance of timely intervention by bank supervisors to prevent bank failures. The scenario African Bank faced is akin to a history of banking challenges, where the need for oversight and quick action is crucial for maintaining a healthy financial environment.