VSB Mutual Bank under curatorship
SLATED: EFF SAYS WHITE-OWNED BANKS TREATED BETTER
Institution had increasing liquidity problems in recent months.
The troubled VBS Mutual Bank has been placed under curatorship with immediate effect, South African Reserve Bank (Sarb) governor Lesetja Kganyago reportedly announced yesterday afternoon.
“VBS experienced increasing liquidity challenges over the last 18 months. These problems emanated from a failure of the board of directors and executive management to manage the bank’s rapid growth and its funding and liquidity position,” he told journalists in Johannesburg.
This had resulted in VBS Mutual Bank being placed under intense regulatory scrutiny, Eyewitness News (EWN) reported.
“The liquidity challenges emanated from the maturity of a large concentration of deposits from municipalities and was exacerbated by the termination of other sizable deposits and the inability to source sufficient funding timeously,” EWN quoted Kganyago as having said.
Earlier, the EFF said placing VBS under curatorship should be a last resort, adding that the bank is being “victimised” because of a loan it gave to former president Jacob Zuma.
City Press reported that VBS faced the possibility of a crash after National Treasury’s instruction to municipalities to stop investing with the institution. The newspaper said the order to municipalities was made early last year and that the Municipal Finance Management Act (MFMA) forbade municipalities from investing in mutual banks.
This resulted in a number of councils withdrawing more than R1 billion from the bank, causing a serious liquidity crisis.
“The EFF believes that placing a bank under curatorship should always be a last resort, something to be done after exhausting different rescue measures and interventions,” the party said in a statement.
“Opting for curatorship as the first measure undermines the bank and undermines black people’s participation in the ownership and control of financial services institutions.”
The “victimisation” of the bank was wrong, said the EFF, because VBS was the only bank which had a plan to finance properties and mortgages in rural areas.
“The EFF is aware that VBS is being victimised due to a loan it gave to Mr Jacob Zuma for a house in Nkandla. Had it been a whiteowned bank, they would not be subject to victimisation today.”
Established in 1982 and initially operated as Venda Building Society, VBS Mutual Bank received a permanent Mutual Bank Licence on October 11, 2000 and currently has about 30 000 clients with deposits of around R800 million.