CAPE TOWN - The South African Reserve Bank (Sarb) says that the South African banking system remains safe and adequately capitalised.
This comes after the reserve bank on Sunday placed corporate finance and retail bank, VBS Mutual Bank under curatorship.
The retail bank has faced liquidity challenges for the past 18 months, said Sarb.
According to Sarb, failure from the board of directors and sizeable municipal deposits caused the insolvency of the corporate bank.
"The liquidity challenges emanated from the maturity of a large concentration of deposits from municipalities, and was exacerbated by the termination of other sizeable deposits and the inability to source sufficient funding timeously. It was highly risky for VBS to take sizeable municipal deposits that were short-term and lend them out long term. The liquidity challenges faced by VBS resulted in difficulty to settle its obligations in the National Payments System on several occasion", said Sarb.
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Subsequently, SizweNtsalubaGobodo Advisory Services (Proprietary) Limited was appointed as the curator that will be taking over the retail bank.
Sarb said that the curator will be represented by partner and the head of the Financial Services Group, Anoosh Rooplal.
SizweNtsalubaGobodo Advisory Services will oversee the usual collection of loans and that lending and transactional banking services continue, said Sarb.
Sarb added that retail deposits amounting to R50 000 per depositor are guaranteed, with the curator acting in the best interest of all creditors.
"The SARB is of the view that the appointment of a curator is in the best interest
of the public and VBS’ depositors. Furthermore, curatorship presents the most
suitable and most effective mechanism to facilitate the orderly management of
the bank", said Sarb.
The reserve bank assured that the SA banking system remains safe and adequately capitalised.
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- BUSINESS REPORT ONLINE