SOUTH AFRICA: VBS Mutual Bank Hits Major Crisis

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Venda based VBS Mutual Bank under curatorship which should last resort in trying to assist the Bank, the Economic Freedom Fighter said it on Sunday, saying the Bank has been “Victimised” because of the loan that it gave to the Former South African president Jacob Zuma.

City Press newspaper reported that VBS Mutual Bank faced the possibility of a spectacular crash after National Treasury’s instruction to municipalities to stop investing with the institution. The newspaper said the order to municipalities was made early last year and started that the Municipal Finance Management Act ( MFMA) forbade municipalities from investing in mutual banks. This resulted in a number of councils withdrawing more than R1 billion from the Bank, Causing a serious liquidity crisis.

“The EFF believes that placing a bank under curatorship should always be a last resort, something to be done after exhausting different rescue measures and interventions, “ The party said it in a statement.

The bank’s cash reserves are reported to be so low that it’s executives said that if main shareholders, the Public Investment Corporation (PIC) and Venda king’s Dyambeu Investments, do not infuse cash the SARB is expected to place the entity under curatorship this week.

“The EFF is aware that has being victimised because of the loan it gave to Mr Jacob Zuma for building a house in Nkandla. If it was a white owned bank that had offered Zuma a loan, they wouldn’t be subject to victimisation today,” it said.

In 2016 the Bank shot to fame when it lent Zuma R7.8 million to repay state fir the non-security upgrades made to his private homestead in Nkhandla in KwaZulu-Natal.

On 2017 the Bank said it was preparing to apply for a full commercial banking licence to continue its upside slide of accumulating assets and getting profits. VBS was established in 1982 and it started operating as Venda Building Society, it then receive a permanent Mutual Bank Licence on 11 October 2000 and currently has about 30,000 clients with a deposit of around R800 million.