Maanda Manyatshe, the acting chairperson of Vele Investments, said the company had withdrawn its legal challenge to the curatorship of VBS.
“Although the case to challenge the curatorship had merit, we have decided on the advice of the board to engage with the National Treasury, the Reserve Bank and the Public Investment Corporation (PIC) to chart the way forward and recapitalise VBS,” Manyatshe said.
“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.”
The company, which holds a 53percent stake in VBS, had on Wednesday launched court papers with the high court in Pretoria arguing that the decision of the central bank was not constitutionally sound.
Tshifhiwa Matodzi, the erstwhile chairperson of Vele, fell on his sword this week when the SA Reserve Bank placed VBS under curatorship after it said VBS had “experienced increasing liquidity challenges over the last 18 months”.
The PIC, which holds about 27percent equity interest of the mutual bank, earlier this week said it would work closely with the appointed curator, SizweNtsalubaGobodo, and all other stakeholders, to assist the bank to navigate through this difficult situation and emerge stronger.
The appointment of the curator meant the current board and management of VBS were relieved of their powers and these were vested in the curator.
Calls from the Black Management Forum (BMF) and other observers that the bank was treated unfairly have grown cold after the cabinet yesterday gave the thumbs up to the move.
At the heart of the BMF’s argument was that the curatorship process should not have been the first method of intervention in assisting VBS with its liquidity challenges.
The cabinet in a statement following its weekly meeting said it remained committed to the diversification and transformation of the financial sector, without jeopardising the interest of the depositors.
“Cabinet has noted the South African Reserve Bank announcement with regard to the VBS Mutual Bank. The appointed curatorship will support the VBS Mutual Bank to restore its liquidity challenges and serve the interests of the public and VBS depositors,” the Cabinet said.
The banking association also threw its weight behind the central bank’s decision to place VBS under curatorship.
Cas Coovadia, the managing director of the Banking Association South Africa, said all South African banks must adhere to the letter and spirit of the law and be able to fulfil their legal duty of care to those who entrust their earnings to them. “In placing VBS Mutual Bank into curatorship, the Reserve Bank acted within its mandate,” Coovadia said.
The last bank to be placed under curatorship was African Bank in 2014, as part of a rescue plan that included a R10billion capital injection.