The South African Reserve Bank’s confidence in saving troubled VBS Mutual Bank has declined since it was placed under curatorship in March, chief executive of the Prudential Authority Kuben Naidoo said on Tuesday.
“The day that we put the bank under curatorship, we were very confident that we could save the bank and that it was largely a liquidity problem,” Naidoo said. “Where we sit today, I think it would be fair to say, we are slightly less confident that we are able to save the bank.”
Naidoo made these comments following the release of the 2017 banking supervision report.
VBS was placed under curatorship after it experienced a liquidity crisis and could not meet its commitments to the national payments system. In the aftermath however, its curator Anoosh Rooplal revealed in court documents that around R900-million could not be accounted for, along with other practises hinting at possible fraudulent activity.
The Reserve Bank has since initiated a forensic investigation into VBS.
But Naidoo said the regulator would continue to do everything in its power to rescue VBS, adding that while its “level of confidence is slightly lower, that’s not to say that it is zero”.
According to the banking supervision report VBS was fined R2.5-million last year, for failing to comply with regulations aimed at preventing money laundering and combating the financing of terrorism.
An amount of R2-million was suspended for a year and VBS was given a directive to take remedial action to correct the deficiencies in its controls.
The bank was fined for not identifying and verifying customers’ details, and failing to report certain cash transactions over R25 000 to the Financial Intelligence Centre (FIC). It also failed to “implement adequate methods in relating to the sanctions screening of customers to ensure that the bank complies with its reporting duties,” the report noted.
The bank also did not have adequate controls and methods in place to report suspicious and unusual transactions.