Reserve Bank secures guarantees up to R100 000 for VBS retail depositors

In March the central bank had announced that retail deposits of up to R50 000 per depositor would be guaranteed, but this has now been increased with the concurrence of the finance minister.

In March the central bank had announced that retail deposits of up to R50 000 per depositor would be guaranteed, but this has now been increased with the concurrence of the finance minister.

The South African Reserve Bank on Wednesday said it has secured guarantees from National Treasury of up to R100 000 per depositor for VBS Mutual Bank retail depositors.

The Reserve Bank said in a statement that it would provide further details on Monday afternoon.

Retail depositors refers to individuals, funeral schemes, burial societies, savings clubs and stokvels.

In March the central bank had announced that retail deposits of up to R50 000 per depositor would be guaranteed, but this has now been increased with the concurrence of the finance minister.

According to the Reserve Bank this is in line with proposals in the discussion paper on the deposit insurance scheme published in May 2017.

“The curator will continue to collect on loans due to VBS Mutual Bank. Individuals and entities with loans at VBS Mutual Bank are expected to continue to make payments on these loans,” the Reserve Bank said.

The Reserve Bank asked depositors to “remain patient” saying the bank was prioritising their best interests.

Earlier on Wednesday Parliament’s Standing Committee on Finance had asked National Treasury to intervene on behalf of depositors affected by the collapse at VBS Mutual Bank.

In a statement the committee expressed concern that since the central bank placed VBS Mutual Bank under curatorship, ordinary depositors might not be able to make withdrawals of money.

The Reserve Bank commissioned an inquiry into VBS Mutual Bank in April, after it was placed under curatorship in March because it was facing a liquidity crisis.

The commission said in a statement that the inquiry should establish whether financial sector regulators were caught sleeping on the job.

The committee said on Wednesday the inquiry should be concluded “expeditiously”.

“We understand that the bank is in a dire financial situation, but surely money that can be released to ordinary depositors should be managed in a more efficient and humane way? As usual, with the failure of a bank, it’s the poorest depositors who are suffering disproportionately and bearing the worst burden,” the statement said.

The oversight committee said it was unacceptable that elderly pensioners and other poor people were having to queue through the night in the bitter cold to withdraw up to a maximum of R1 000, and had to return regularly to do so.

“We believe the government needs to finalise a bill on a comprehensive deposit insurance scheme which will safeguard the funds of depositors in cases of banks collapsing.”

The committee urged that all the current investigations into wrongdoing related to the bank be completed “swiftly and efficiently – and those identified as the wrongdoers to face the full might of the law”. — Fin 24

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