Nedbank takes over VBS deposit accounts

Retail depositors at VBS Mutual Bank are being migrated to Nedbank so they have access to more of their money while the South African Reserve Bank (SARB) assesses the extent of financial loss at VBS.

SARB announced on Monday that, following discussions with National Treasury, government has provided a guarantee to the SARB to facilitate the repayment of all VBS retail deposits up to R100,000 per retail depositor, starting from Friday, 13 July 2018.

Retail deposits are defined as deposits in VBS by individuals, burial societies, stokvels and savings clubs – collectively referred to as retail depositors. The guarantee does not cover municipal or corporate deposits.

This means that depositors who banked with VBS will now be able to access double the initial amount given when VBS was placed under curatorship in March.

To facilitate the new guarantees and give depositors access to the funds, SARB has selected Nedbank to take over the accounts. Nedbank was chosen for its accessibility and speed of paying out – but also because it offers similar products as VBS, so depositors can also choose to leave their funds with Nedbank.

Depositors will have to go to a Nedbank branch with all the required documentation to open a new account, as the banking group will have to open an account for each depositor. Individuals will get a Nedbank card, which they can transact with – but stokvels, burial societies and savings clubs will have to transact at branches.

“Retail depositors’ funds in their new Nedbank accounts will be secure and accessible for up to three years, and there should be no rush for people to withdraw their funds,” SARB said.

“It is estimated that about 97% of the 22,700 VBS retail depositors will receive all of their money. We are mindful that some retail depositors have larger amounts deposited in VBS. Together with the Curator, the SARB and Prudential Authority will continue to work towards recovering as much money owed to VBS as possible.”

Forensic investigation

Meanwhile, the investigation into the financial crisis at VBS continues, SARB said.

It was found that the group’s latest financial statements have not shown an accurate picture of what’s been going on at the bank, and until these have been investigated and restated, “it is difficult to assess the amount of monies that may be recovered and what proportion of other depositors’ funds is likely to be recovered”.

Weekend reports, however, have given more insight into the extent of the damages done.

The City Press reported that over R1.5 billion was looted from VBS by its own executives and directors, revealing this past weekend how it was accomplished.

According to the paper, citing affidavits submitted by employees in the ongoing investigation, it is alleged that the bank’s directors manually entered fake deposits into its systems, drawing the non-existent money to bribe officials and allow its directors to buy companies.

Directors would allegedly manually enter in fake deposits from a ‘suspense account’ or a made up source – this would then reflect on the bank’s systems. Real money could then be withdrawn, with the funds covered by the real depositors.

Despite the allegations, the Reserve Bank warned clients that still have loans with the bank that they are still legally obligated to keep making repayments, as they could otherwise face penalties and sanctions.


Read: VBS put ‘fake money’ into its accounts – and drew it to bribe officials and buy businesses: report

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