CAPE TOWN - Embattled South African small lender has been in the media previously for all the wrong reasons.
On Sunday VBS Mutual Bank was placed under curatorship under the South African Reserve BANK (SARB).
Reserve Bank Governor Lesetja Kganyago said that the bank faced liquidity issues.
According to reports, the bank will remain open, while the central bank puts its rescue plan in place.
What you need to know about VBS:
The wholly black-owned bank was established in 1982 and is registered with SARB.
The bank rose to fame following its R7.8 million loan to former South African President, Jacob Zuma in 2016. The loan was given to Zuma in order for him to reimburse the state for the non-security upgrades made to his private homestead in Nkandla.
The bank has since been labeled the "zuma bank".
In the same year, the bank came under sharp scrutiny for another loan it has approved. This loan in question was a staggering R136 million to the bank's chairperson and chief operations officer, Tshifhiwa Matodzi and Robert Madzonga. The bank’s chief executive, Andile Ramavhunga, denied these claims, according to City Press.
Just last month, the bank was again in the firing line after reports said that Passenger Rail Agency Service (PRASA) was investing R1 billion in VBS.
VBS then responded by stating that it did submit a proposal, but no decision had been made.
Troubles at VBS began when the bank learned that municipalities were now not allowed to invest in mutual banks.
VBS chairperson Tshifhiwa Matodzi addressed this issue in a letter to the SARB registrar Kuben Naidoo and Treasury director-general Dondo Mogajane.
Matodzi said that he approached Treasury’s MFMA in March 2017. He reportedly reached out to the MFMA due to concerns that its instruction to municipalities was crippling banks.
Matodzi then said that after much negotiation, it was evident that VBS's fate was already decided and would be placed under curatorship.
- BUSINESS REPORT ONLINE