Banks bid for PMB’s R945 million

2016-09-09 09:14
VBS Bank which granted a loan to President Zuma for his Nkandla upgrades has made a bid to manage Msunduzi Municipality's almost R1 Billion investment.

VBS Bank which granted a loan to President Zuma for his Nkandla upgrades has made a bid to manage Msunduzi Municipality's almost R1 Billion investment. (File)

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A little-known bank, which has granted a loan to President Jacob Zuma to pay his portion for the upgrades at his Nkandla home, has made a bid to manage Msunduzi Municipality’s almost R1 billion in investments.

VBS Mutual Bank (VBS), a registered bank that primarily services Limpopo, made a presentation to the municipality on July 4 to provide banking services and short-term investments to the municipality.

A VBS spokesperson, Tsumbo Matambela, said yesterday their presentation in Maritzburg was part of a roadshow VBS did at many municipalities and state-owned enterprises in Kwa­Zulu-Natal, and in other provinces, which the bank undertook as part of efforts to “spread its wings”.

However, the municipality considered the presentation to be an “unsolicited bid”.

This was because, according to council documents, there is an existing five-year bank services provision tender in place, which started from December 2012 and only ends in December 2017.

First National Bank, Standard Bank, Absa Bank and Nedbank currently provide these services to the municipality.

VBS, according to the South African Reserve Bank’s website, had total equity and liabilities of around R1 billion by June this year, more than R538 million of which is made up of household deposits, while some R254 million comprises mortgages on homes. If the bank secured Msunduzi’s business, it would almost double its equity.

In contrast, Standard Bank’s total equity and liabilities are about R1,2 trillion.

The municipality’s legal department said in a document that banking services may only be provided to the municipality through a competitive tender process.

“It is our view that the municipality is precluded from contracting on the basis of an unsolicited bid,” the department said.

Sifiso Khoza, a manager of municipal budget implementation and monitoring at the municipality, initially delayed the writing of a report on the VBS presentation, for which he has faced disciplinary proceedings, documents show.

The municipality subsequently, on August 17, issued a tender for a financial services company to manage the investments, with the bids expected to be opened next Friday.

Tenderers would be judged according to their experience in managing investments for the public sector, and would have to be a registered bank and registered with the Financial Services Board.

Most of Msunduzi’s R945 million in investments is unused conditional government grants.

Matambela said yesterday there was no link between the tender and their presentation.

VBS’s shareholding structure, according to its website, is made up of a one percent stake held by an employee share scheme, 25% is owned by the Public Investment Corporation, which manages government pensions, 26% by an entity called Dyambeu Investments, while 48% of its shares are simply listed as “other”.

One of the major shareholders of Dyambeu is Khosikhulu Toni Mphephu Ramabulana, who was due to be crowned the king of the Vhavenda by Zuma today, but has been thwarted by a rival claim to the crown.

Msunduzi spokesperson Thobeka Mafumbatha said the recent tender issued was for investment services and not for banking services, and she said no unsolicited bids would be entertained.

She said no decision had been made to use VBS’s services, but the bank would be considered just like any other tenderer if it submitted an application.

Read more on:    nkandla upgrade

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