South Africa cannot afford a bank collapse while it is on the path of inclusive economic recovery, according to Banking Association of South Africa (BASA) managing director Cas Coovadia.
Coovadia in a statement on Thursday shared the association’s views on the South African Reserve Bank’s (SARB’s) decision to place VBS Mutual Bank under curatorship.
SARB governor Lesetja Kganyago announced on Sunday that audit firm SizweNtsalubaGobodo would be the curator to assist the bank, which is facing a liquidity crisis.
BASA is of the view that the Reserve Bank acted within its mandate, the law and “independently of special interests” by placing VBS under curatorship.
“The collapse of a bank, no matter how big or small, often results in those who can least afford it losing access to their money, and harms business, consumer and investor confidence in the country,” said Coovadia.
“South Africa cannot afford this, especially as it is just starting out towards inclusive economic recovery.”
Coovadia said banks are placed under curatorship to protect the money of depositors and the strength of the national financial system.
Earlier this week, Treasury said that curatorship was a better option than liquidation and expressed the view that VBS could come out the process stronger than before.
“It is never the intention of Treasury for any bank to be liquidated, particularly a small black-owned bank,” it said.
One of VBS’s major shareholders, the Public Investment Corporation, has also supported the SARB’s decision, saying it would cooperate with the curator.
ANC secretary general Ace Magashule on Tuesday met with VBS. The ANC National Working Committee has said that the curatorship should seek to “resuscitate and assist VBS to function optimally within the requisite regulations”.
Trade union federation Cosatu, meanwhile, has criticised the decision to place the bank under curatorship. — Fin 24