Kganyago: Liquidity problems led to VBS being placed under curatorship

The bank’s complete assets amount to R2 billion but R1 billion of that was withdrawn by municipalities after a ruling on mutual banks.

The VBS Mutual Bank logo. Picture: vbsmutualbank.co.za

JOHANNESBURG – The SA Reserve Bank says the VBS Mutual Bank’s liquidity problems led to it being placed under curatorship.

The bank’s complete assets amount to R2 billion but R1 billion of that was withdrawn by municipalities after a ruling on mutual banks.

VBS is the bank that helped former president Jacob Zuma pay R7.8 million in connection with the Nkandla upgrades.

Governor Lesetja Kganyago says liquidity problems saw the bank battle to settle its obligations on several occasions.

Municipalities had begun withdrawing money after a ruling that they must operate through commercial banks.

Kganyago says VBS’s board of directors and executive also failed to manage the bank’s rapid growth.

"The shareholders of VBS had a choice. They could have decided to put additional capital and add additional liquidity to the institution."

Kganyago says curatorship is the most suitable and effective mechanism to manage the bank.

He says VBS will remain operational.