Cosatu calls VBS curatorship ‘shabby’, goes against RET

EMBATTLED VBS Mutual Bank started and finished this week on the ropes after it aborted its ill-fated court challenge to the SA Reserve Bank’s decision to place it under curatorship.

Maanda Manyatshe, the acting chairperson of Vele Investments, which owns 53% of VBS, said it withdrew its legal challenge to allow the process of engagement with National Treasury, the central bank and the Public Investment Corporation (PIC) to continue.

“We will be meeting soon with clear plans to re-establish VBS as a credible financial sector player,” Manyatshe said.

VBS found itself increasingly isolated as the week wore on, receiving little support from other stakeholders.

The National Treasury, the Banking Association SA and the PIC, which is the banks second-biggest shareholder, all backed the decision.

The cabinet also weighedin on the matter, giving its backing to the Reserve Bank’s decision.

Trade union federation Cosatu and the Black Management Forum (BMF) came out batting for VBS.

BMF said the curatorship process should not have been the first method of intervention in assisting the bank with its liquidity challenges.

“The BMF urges that the VBS commercial licensing application process be expedited to ensure that they do not wait the normal 12-18 months review period,” BMF said.

Cosatu fell short of calling the decision illegal. Sizwe Pamla, spokesperson, said the Reserve Bank’s “shabby” treatment of VBS was another reason the bank should be nationalised. “The decision is a sharp reminder that the Reserve Bank as an institution has no appetite to see the financial sector transformed and that its lack of accountability remains poisonous for poor people and black businesses,” Pamla said.

“The Treasury and Reserve Bank conduct goes against radical economic transformation and must be condemned since it deviates from the objectives of transformation as articulated by the 54th ANC Congress to change the institutions and policies and laws in order to advance transformation.”

The central bank put VBS under curatorship as it was unable to repay money it owed to municipalities.

According to SARB governor Lesetja Kganyago, the bank’s “severe liquidity crisis” required official action.

VBS was the second bank in less than 10 years to be placed under curatorship by the Reserve Bank.

In 2014, African Bank Limited was placed under curatorship by the central bank.

Treasury said throughout 2013 and 2014 it had continued to encourage African Bank to address the concerns it raised, and in September 2014 the bank instituted a formal independent investigation of the circumstances that gave rise to African Bank being placed under curatorship.

The central bank last month, however, decided against placing Capitec under curatorship after the bank was accused by American shortseller Viceroy Research of being a “loan shark” and that its defaults would eventually unravel.

The central bank had argued that “according to all the information available, Capitec is solvent, well capitalised and has adequate liquidity”.