Cape Town – One of VBS Mutual Bank’s major shareholders, Vele Investments, has dropped its legal challenge against the mutual bank’s curatorship.
Vele Investments, which has a 53% shareholding in VBS Mutual Bank, confirmed this in an emailed response to Fin24.
This comes following reports in the Business Day that Vele Investments filed an affidavit at the North Gauteng High Court this week challenging the Reserve Bank’s decision to place VBS under curatorship on the grounds that it was unconstitutional.
On Sunday Reserve Bank Governor Lesetja Kganyago announced that VBS would be placed under curatorship given its severe liquidity crisis. The decision was made in the interests of the public and to protect depositors, he said.
Deputy Governor Kuben Naidoo, who was also at the briefing, said that in mid-February the SARB had engaged with the board and management of VBS as well as its shareholders to develop a rescue plan.
Naidoo said it was unlikely that the shareholders would be able to provide the necessary cash injection within time to manage the liquidity crisis. "After an exhaustive process of engaging with the board, management and shareholders, there was no other solution besides curatorship," he said.
Vele Investments, which initially opposed the curatorship, changed its tune on the advice of its board.
“Although the case to challenge the curatorship had merit, we have decided on advice of the board to engage with National Treasury, the Reserve Bank and the Public Investment Corporation to chart the way forward and recapitalise VBS,” said acting chairperson Maanda Manyatshe.
Vele Investments has started engaging with National Treasury and the Public Investment Corporation, which has a 27% shareholding in VBS, and called the discussions “fruitful”.
“We will be meeting again soon with clear plans ahead to re-establish VBS as a credible financial sector player.
Earlier this week PIC affirmed its commitment to work with curator SizweNtsalubaGobodo and other stakeholders to chart a way forward for VBS Bank.
“Together we will ensure that VBS has a viable strategy for the way forward and fulfil all obligations to move from mutual status to a fully commercial bank so that we can build a viable black bank,” Manyatshe said.
SARB confirmed on Sunday that VBS only applied for a banking licence on February 26 2017.
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