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Sarb: Curator to attempt to restore liquidity to VBS Bank

Reserve Bank Governor Lesetja Kganyago announced on Sunday that VBS had been placed under curatorship but would remain operational.

The Venda Building Society Mutual bank logo. Picture: vbsmutualbank.co.za

JOHANNESBURG – The South African Reserve Bank (Sarb) says a curator will now attempt to restore liquidity to VBS Bank which has been left cash-strapped after municipalities withdrew substantial amounts.

Reserve Bank Governor Lesetja Kganyago announced on Sunday that VBS had been placed under curatorship but would remain operational.

He says that VBS's troubles began when municipalities withdrew over a billion rand after it was declared under the Municipal Finance Management Act that they were forbidden from investing in mutual banks.

VBS was also in the spotlight in 2016 after it serviced former President Jacob Zuma with a R7.8 million loan to pay for Nkandla.

Kganyago says VBS Bank applied for a banking license just over two weeks ago after municipalities withdrew their investments.

He says those investments amounted to over a billion rand, with the bank’s assets at just over R2 billion.

“The whole idea of putting banks under curatorship is because you believe that maybe it might just be salvageable.”

He says the withdrawal seems to have crippled VBS, leaving the Reserve Bank with no choice but to place it under curatorship.

Kganyago says that funds deposited into the bank remain safe but both VBS and municipalities broke the law as municipalities are compelled to only bank with registered commercial banks.

The current board and management of VBS have been relieved of their duties.