Johannesburg - VBS Mutual Bank, previously known as Venda Building Society, has undergone a stunning transformation, from being a loss-making entity to one with R1 billion under management, and operating in the black.
The bank, which has controversially lent President Jacob Zuma R7.8 million to pay back funding for non-security items on his Nkandla homestead, was established in 1982.
It was initially set up, according to Deputy Finance Minister Mcebisi Jonas, speaking on Radio 702 this morning, to help finance those who wanted to buy homes in the then-bantustans, but had no security - such as land - to back the loan.
The Presidency said in a statement on Monday that Zuma obtained the loan on standard terms, and that VBS is “one of the few financial institutions which offer home loans in respect of land owned by traditional authorities”. No other details were given, but assuming Zuma - who is 74 - achieves the standard term of 20 years at a preferable lending rate of prime, currently 10.5 percent, it will cost him R78 000 a month to repay the loan.
Zuma currently earns R339 000 a month, according to mywage.co.za.
The wholly black-owned specialist corporate finance and retail bank is registered and regulated by the South African Reserve Bank and is governed by the Mutual Bank's Act.
In VBS’s annual report, its CEO notes: “As a bank we believe in responsible and sustainable lending. During the year under review, the management team went on a robust exercise of refining and improving the bank’s policies and procedures. This culminated in the introduction of a new and robust credit policy that takes into account the South African market conditions as well as occurrence that happen globally.”
Footprint
Its corporate office is in Rivonia, Johannesburg, and it has what it calls a “spread” of four branches, mainly in Limpopo. It’s a level one empowerment contributor, and claims it is 99.93 percent black owned, although a government entity, the Public Investment Corporation, holds a quarter of its stock.
Typically, stakes owned by government and its entities are not counted as being empowered. IOL was unable to chase up this aspect as the bank’s BEE certificate does not open, as that link redirects to its front page.
Another 26 percent of the bank is owned by Dyambeu investments, 48 percent by other, unnamed, shareholders and a percent is in the hands of staff through a trust.
Dyambeu, led by Venda King Khosikhulu Toni Mphephu Ramabulana, bought the stake in 2013 and its chairman Tshifhiwa Matodzi notes in its 2016 annual report that the organisation has been involved with the bank strategy and turnaround since then.
It has R1 billion in assets under management, a figure that has grown from R330 million in 2014, and made R4.9 million in profit in the 2016 year, up from a loss of R1.9 million two years ago.
VBS had 87 staff and R250 million in the bank at the end of the 2016 year.
Matodzi, a qualified CA(SA), had only been with the bank for a year by the time he penned his chairman’s note in the 2016 annual report.
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He served his articles at KPMG and worked for SizweNtsaluba and EY before joining Denel as FD. Between 2006 and 205, he was CFO at Brilliant Telecommunications. He also serves on Dyambeu’s board.
CEO Andile Ramavhunga, who is also a CA(SA), has been employed by companies including Deloitte, FirstRand, ABSA, Landbank, Ithala and Sefa.
In his review, Ramavhunga notes the bank took the year to March 2016 to revamp its branch network, relocating its underperforming branch. “This yielded results in drawing customer feet into our branches, thereby increasing public deposits.”
Ramavhunga says lending to corporates (SMEs) comprises 53 percent of the total lending book ,which is a shift from a 100 percent retail lending book of 2013.
IOL