VBS is not the only bank to go bust, check out the list
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.
A recent paper published by the University of Pretoria outlined all the cases of failed banks in the country since 1990 – showing 12 (13 including VBS) banks that were placed under curatorship, three of which would ultimately be liquidated.
Reasons for these banks failing include fraud, bad management and liquidity problems.
Here is a list of banks that have gone into liquidation in SA for the past 30 years:
1. Alpha Bank (1990)
2. Cape Investment Bank (1991)
3. Pretoria Bank (1991)
4. Alpha Bank 1993
5. Sechold Bank (1994)
6. Prima Bank (1994)
7. The African Bank (1995)
8. Community Mutual Bank (1996)
9. Islamic Bank (1997)
10. FBC Fidelity Bank (1999)
11. Regal Treasury Bank (2002)
12. New Republic Bank (2002)
13. Saambou Bank (2002)
14. The African Bank (2014)
15. VBS Mutual Bank (2018)
- BUSINESS REPORT ONLINE