{"id":230799,"date":"2018-03-12T07:30:10","date_gmt":"2018-03-12T05:30:10","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=230799"},"modified":"2018-03-12T07:30:10","modified_gmt":"2018-03-12T05:30:10","slug":"sa-lender-vbs-mutual-bank-put-into-administration","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/230799\/sa-lender-vbs-mutual-bank-put-into-administration\/","title":{"rendered":"SA lender VBS Mutual Bank put into administration"},"content":{"rendered":"
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VBS Mutual Bank, one of South Africa\u2019s smallest lenders, has been put into administration after it was unable to repay money owed to municipalities, according to the country\u2019s central bank.<\/p>\n

The management team was relieved of its duties and a curator from the auditing firm SizweNtsalubaGobodo has been put in place following a \u201csevere liquidity crisis,\u201d Lesetja Kganyago, governor of the South Africa Reserve Bank, told reporters on Sunday.<\/p>\n

Retail depositors\u2019 money is guaranteed and VBS will stay open, he said.<\/p>\n

VBS has operated as a licensed mutual bank, funded by its members, for 25 years, according to its website. The lender, which isn\u2019t listed, gained attention in 2016 when it gave former President Jacob Zuma a mortgage to settle a Constitutional Court order to repay taxpayers some of the money spent upgrading his private residence.<\/p>\n

The bank was fined R500,000 ($42,319) last year because of weaknesses in its control measures to prevent money laundering and combating the financing of terrorism.<\/p>\n

\u201cEighteen months ago there was a significant increase in municipal deposits\u201d at VBS, Kuben Naidoo, South Africa\u2019s banking regulator, said in the same presentation. \u201cIt\u2019s quite a risky strategy to take that money and lend it long term. When the municipalities came asking for that money, the bank wasn\u2019t able to pay.\u201d<\/p>\n

The trigger that sent the bank into administration was its inability to honor an obligation to a municipality on Feb. 16, Naidoo said, without identifying the municipality. Although VBS was asked to develop a plan, it became clear that its major shareholders wouldn\u2019t be able to provide the amount of money the bank needed within a short space of time, Naidoo said.<\/p>\n

VBS operates six branches across the country and calls itself a black-owned specialist corporate-finance and retail bank. VBS\u2019s total assets were R2.4 billion at the end of December, according to the most recent central bank data. One of the biggest shareholders is the Public Investment Corp, Africa\u2019s largest fund manager.<\/p>\n

\u201cWe don\u2019t see a solution to the liquidity problems other than the solution of curatorship,\u201d Naidoo said. \u201cSmall depositors with less than R50,000 should be able to access their money overnight. It\u2019s quite likely that all depositors won\u2019t be able to get their money immediately.\u201d<\/p>\n

South Africa\u2019s previous bank failure was in 2014 when African Bank Investments Ltd\u2019s lending unit collapsed after bad debts soared and it wasn\u2019t able to raise funding. African Bank is still operating after the central bank stepped in to rescue the viable assets.<\/p>\n

South Africa\u2019s gross domestic product expanded 1.3 percent in 2017, showing economic growth for the first time in four years even as ongoing political instability hurt investor confidence. All four of South Africa\u2019s biggest lenders reported profit growth in the second half of 2017 and the banks\u2019 index has climbed 6.6 percent this year, reaching a record high on Tuesday.<\/p>\n

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Read: Here\u2019s what you can expect from your bank in 2018<\/a><\/strong><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

VBS Mutual Bank, one of South Africa\u2019s smallest lenders, has been put into administration after it was unable to repay money owed to municipalities, according to the country\u2019s central bank.<\/p>\n","protected":false},"author":59,"featured_media":201738,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[26,12917],"class_list":["post-230799","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-headline","tag-vbs-mutual-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/230799","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=230799"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/230799\/revisions"}],"predecessor-version":[{"id":230803,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/230799\/revisions\/230803"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/201738"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=230799"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=230799"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=230799"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}