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Reserve Bank applies for VBS Mutual Bank to be liquidated

The Reserve Bank's Prudential Authority says that the final winding-up of VBS is in the best interests of all parties.

VBS Mutual Bank in Thohoyandou. Picture: Sethembiso Zulu/EWN

JOHANNESBURG - The Reserve Bank wants scandal-ridden VBS Mutual Bank to be liquidated, saying the institution is hopelessly insolvent.

The banking authority says while it understands that the Finance Minister placed the bank under curatorship earlier this year, it’s of the view that the arrangement must now be terminated and the bank must be wound up.

The Great Bank Heist report commissioned by the Reserve Bank revealed R1.8 billion was looted from the bank by politicians, the bank’s executives and a former partner of auditing firm KPMG.

The Prudential Authority filed an application with the high court on Monday for the liquidation of VBS, saying the bank is hopelessly insolvent and beset by massive fraud.

It expects this application to be set down for a formal hearing early next month.

The regulating body says liquidating the bank will be in the interests of all parties.

It says this process will allow a liquidator to utilise the machinery provided for in insolvency legislation and the Companies Act to effect recoveries and follow the recommendations of the probe into the affairs of VBS.

(Edited by Thapelo Lekabe)