Depositors concerned over bank’s curatorship
One of the co-founders of the embattled Venda Building Society Mutual Bank (VBS), Madambi Muvhulawa, refuted allegations the bank has totally collapsed and it may close any time, saying the bank was under curatorship in order to survive and it is nursing it back to health.
LIMPOPO –Â This comes after National Treasury confirmed the Minister of Finance, Nhlanhla Nene, approved the recommendation of the Registrar of Banks to place VBS under curatorship.
There were also allegations that some municipalities in the Vhembe region, which have already invested over R1 billion with the bank, have withdrawn the money.
Treasury said, being highly regulated entities, all banks need to not only set aside large capital reserves, but take care not to break the law in all their activities and fully comply with laws like the Public Finance Management Act (PFMA), Municipal Finance Management Act (MFMA) and the Financial Intelligence Centre (FIC) Act.
The MFMA does not allow municipalities to bank with a mutual bank, but allows it to do so with a fully registered bank.
Reacting to the announcement, Treasury said the Registrar of Banks fulfils a critical role in the regulatory framework to protect depositors, customers and the shareholders of a mutual bank.
Treasury said the aim of the curatorship is ultimately to turn the mutual bank around.
“This is in contrast to liquidation, where the mutual bank is closed down.
“The curator is given the legal means to create the necessary mechanisms to implement a resolution plan which will ensure the long-run sustainability of VBS.
“The recent example of African Bank, which emerged as a stronger bank after curatorship, should be noted,” Treasury said in a statement.
“Municipalities make their own decisions on banking and investment, as long as it is within the framework of the law,” Treasury said, adding it will engage affected municipalities to determine the extent of their potential loss and to ensure service delivery is not affected.
“In the past few weeks, National Treasury and the Reserve Bank have been working closely to try and save the bank to protect ordinary depositors.
“It is never the intention of Treasury for any bank to be liquidated, particularly a small black-owned bank.
“National Treasury’s actions are trying to balance the need for a more diversified small banking.”
