Cape Town – Reserve Bank governor Lesetja Kganyago has slammed ideas that its decision to place VBS Mutual Bank under curatorship is an attack on black-owned banks.
Kganyago was speaking at a briefing on Sunday afternoon, where he announced that the mutual bank would be placed under curatorship given the “severity” of its liquidity crisis.
VBS first came into the spotlight in 2016 when it was revealed that the bank granted former president Jacob Zuma a R7.8m bond to pay for security upgrades at his Nkandla residence.
Auditing firm SizweNtsalubaGobodo has been appointed curator to assess the way forward for the bank. For now, its planned listing on the JSE has been postponed, Kganyago told journalists.
Hours before the briefing, the Economic Freedom Fighters (EFF) issued a statement saying it would be writing to the Reserve Bank and Treasury to consider other rescue measures. The EFF views curatorship as undermining and hindering the participation of black people in the financial services sector.
However, at the briefing Kganyago said it is “plain wrong” to view the bank’s actions as an attack on a black bank.
“The colour of money is red, it is green, yellow, it’s blue. If you apply for a banking licence and you are taking deposits you will be supervised in terms of the Banks Act, irrespective of who owns you,” he said. “The notion that the Reserve Bank decided to attack a black bank has to be condemned.”
“We supervise all banks irrespective of who owns them,” said Kganyago.
He emphasised that the central bank was acting in the public interest by protecting depositors' funds.
Deputy governors Kuben Naidoo and Francois Groepe echoed his views.
“It’s not about a black bank or a white bank,” said Naidoo. He explained it was about protecting depositors and in this case it includes deposits from stokvels and rural people, who are mostly black. “We have a legal obligation to protect them,” he said.
“We act in terms of the Constitution, without fear, favour, or prejudice,” said Groepe. He added that it is objectionable to say the Reserve Bank acts in bias. “We do not see colour. We regulate these entities to the best of our abilities,” said Groepe.
Naidoo explained that the decision to place VBS under curatorship was triggered on February 16, when it failed to honour an obligation of the National Payments System. The Reserve Bank had discussions with the bank’s management and board as well as its biggest shareholders - the Public Investment Corporation and Vele Investments - to develop a rescue plan.
“After an exhaustive process of engaging with the board, management and shareholders, there was no other solution besides curatorship," he said.
Naidoo advised people with loans from VBS to continue paying them off. The bank will continue to operate its transactional accounts and will be recovering loan repayments, he explained.
Those with small deposits of less than R50 000 will be able to access their money overnight, he said.
“We are appealing to people with deposits at the bank to understand that it is protected and government is protecting those deposits.”
Naidoo said that the curator will likely develop a plan to manage the liquidity going forward.
“It is likely depositors won’t get their money immediately,” he said. The curator will likely consider the interests of creditors first. The curator will put in place a operational plan to remedy the crisis, he explained.
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