CAPE TOWN - VBS Mutual Bank has been put under curatorship, following liquidity challenges stemming from the termination of deposits from municipalities, who are not allowed to use mutual banks according to municipal finance laws.
This makes VBS the 13th bank in almost 30 years to go through the process in South Africa and the first since African Bank’s collapse in 2014.
In VBS’s case, the fault came through failure by the bank’s management to align the business with its sudden rate of growth.
The SARB said the bank made incredibly risky moves, particularly around using short-term municipal deposits as a base for long-term lending.
When the municipalities came to withdraw their funds, the bank did not have the funds to pay them.