VBS liable to go bust
VBS mutual bank faces the possibility of going bust after the Treasury instructed municipalities to stop investing with it.
In 2017, the Municipal Finance Management Act (MFMA) forbade municipalities from investing in mutual banks, which meant that more than R1-billion was withdrawn from the bank, creating a liquidity crisis.
City Press learnt that the VBS is expected to be placed within the curatorship of the South African Reserve Bank if the Public Investment Corporation (PIC) and Vele Investments do not inject cash into the entity.
On Friday, VBS chairperson Tshifhiwa Matodzi accused Sarb and the Treasury of not welcoming “a black bank” and that “black management is incompetent and noncompliant”.
Matodzi further told the registrar of the South African Reserve Bank (SARB), Kuben Naidoo, and the Treasury director-general, Dondo Mogajane, “In the end we were faced with a well-organised and powerful system that does not tolerate growing black banks and black excellence, just as the old African Bank was killed to prevent it from competing with the big guys.”
According to Matodzi, neither the PIC, Sarb or the treasury was willing to negotiate an arrangement. However, Sarb spokesperson Jabulani Sikhakhane told the City Press that both the reserve bank and the Treasury were working to solve VBS’s liquidity crisis.
He argues further that his bank did not receive the same amount of support when the media attacked it for granting a a R7.8-million loan to former president Jacob Zuma to settle the debt for his Nkandla home in 2016, like it supported Capitec whose faced damning accusations after the publication of the Viceroy report.
VBS was established in 1982 and operated as Venda Building Society. In 2000, it received a permanent Mutual Bank License. To date, it has roughly 30 000 clients.