South African Reserve Bank (SARB) Governor Lesetja Kganyago has announced that VBS Mutual Bank has been placed under curatorship with immediate effect.
“VBS experienced increasing liquidity challenges over the last 18 months. These problems emanated from a failure of the board of directors and executive management to manage the bank’s rapid growth and its funding and liquidity position.”
He says this resulted in VBS being placed under intense regulatory scrutiny.
“The liquidity challenges emanated from the maturity of a large concentration of deposits from municipalities and was exacerbated by the termination of other sizable deposits and the inability to source sufficient funding timeously.”
He says it was highly risky for the bank to take sizable municipal deposits that were short term and lend them out long term.
“The minister of finance, upon the recommendation from the Registrar of Banks, has decided to put VBS Mutual Bank under curatorship with effect from 5 pm on Sunday, 11 March 2018.”
VBS is the bank that gave former president Jacob Zuma a R7.8 million loan to pay off his Nkandla debt.