VBS IS DOOMED, SAYS RE­SERVE BANK

Daily Dispatch - - Front Page - LINDA ENSOR and BEKEZELA PHAKATHI

Deputy gov­er­nor Kuben Naidoo says the be­leagured bank is “mas­sively in­sol­vent”

The Re­serve Bank has pushed back on po­lit­i­cal pres­sure to save VBS Mu­tual Bank, which col­lapsed in one of the coun­try’s worst cor­po­rate fraud scan­dals, with di­rec­tors steal­ing about R2bn.

A day af­ter Pres­i­dent Cyril Ramaphosa told par­lia­ment that the VBS model should be raised from the ashes, the cen­tral bank’s deputy gov­er­nor and Pru­den­tial Au­thor­ity CEO Kuben Naidoo said on Wed­nes­day there was no op­tion but to ap­ply for the liq­ui­da­tion of VBS once it be­came clear that it was in­sol­vent.

EFF MP Mbuyiseni Nd­lozi in mid­week ac­cused the Bank of be­ing hell-bent on killing VBS, say­ing it had di­verted from its pre­vi­ous prac­tice of try­ing to save trou­bled lenders.

Yunus Car­rim, the chair of par­lia­ment’s stand­ing com­mit­tee on fi­nance, said in Oc­to­ber that ev­ery at­tempt should be made to res­cue the mu­tual bank and that its dis­ap­pear­ance would be a set­back for trans­for­ma­tion in the sec­tor.

VBS, set up in the for­mer Venda home­land, made na­tional head­lines in 2016 when it lent for­mer pres­i­dent Ja­cob Zuma al­most R8m, af­ter for­mer pub­lic pro­tec­tor Thuli Madon­sela or­dered him to re­pay the state for up­grades to his Nkandla home­stead.

The bank col­lapsed in March due to fraud and cor­rup­tion by its di­rec­tors. It later emerged that the ANC had re­ceived R2m from VBS’s big­gest share­holder, while the DA in Oc­to­ber said par­lia­ment would start an in­ves­ti­ga­tion into EFF deputy pres­i­dent Floyd Shivambu over pay­ments al­legedly re­ceived via his brother.

Naidoo told MPs on Wed­nes­day VBS was “mas­sively in­sol­vent”, to the tune of about R372m. The Re­serve Bank launched a court ap­pli­ca­tion on Oc­to­ber 29 for the mu­tual bank’s liq­ui­da­tion.

Ac­cord­ing to leg­is­la­tion, once the Pru­den­tial Au­thor­ity has es­tab­lished that a bank is in­sol­vent, it is “legally obliged to ap­proach the courts to ap­ply for liq­ui­da­tion of the bank”.

The process could take sev­eral years and would en­tail re­cov­er­ing money owed to the bank, sell­ing as­sets and clos­ing op­er­a­tions.

Naidoo said he be­lieved cred­i­tors could not hope to re­ceive more than about 20c to 30c on the rand. “I am not op­ti­mistic that we will re­cover a huge amount,” he told MPs.

“Our ad­vice to any­one who wants to save the bank or pro­vide sim­i­lar ser­vices in the re­gion is to use any fi­nan­cial re­sources that they have to ap­ply for a new bank­ing li­cence,” which would be cheaper and “avoid the sys­tem and le­gacy prob­lems as­so­ci­ated with the old VBS”, Naidoo said.

Ramaphosa said on Tues­day that the spe­cific VBS model of pro­vid­ing af­ford­able and ac­ces­si­ble bank­ing ser­vices to poor com­mu­ni­ties should be re­vived.

“I am one of those who have a great deal of af­fec­tion and loy­alty to VBS,” he said. “It op­er­ated where my par­ents grew up.”

Pic­ture: FREDDY MAVUNDA

IT’S ALL OVER: Re­serve Bank deputy gov­er­nor Kuben Naidoo said there was no op­tion but to ap­ply for the liq­ui­da­tion of VBS.

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