VBS curatorship intended to turn around the bank, says Treasury

PRETORIA – Placing the troubled VBS Mutual Bank under curatorship- as announced by South African Reserve Bank (SARB) governor Lesetja Kganyago on Sunday afternoon- is intended, ultimately to turn the bank account, said the National Treasury.

Minister of Finance Nhlanhla Nene had approved the recommendation of the Registrar of Banks to place VBS Mutual Bank under curatorship to nurse the bank back to health, said the Treasury in a statement after Kganyago’s announcement.

The registrar fulfilled a very critical role in the regulatory framework to protect depositors, customers, and the shareholders of a mutual bank. The whole aim of curatorship was ultimately to turn the bank around, which is in contrast with liquidation, where the mutual bank was closed down, the Treasury said.

The curator was given the legal means to create the mechanism to implement a resolution plan that would ensure the long-run sustainability of VBS.

Being highly regulated entities, all banks needed to not only set aside large capital reserves, but also take care not to break the law in all their activities, hence they have to fully comply with laws such as the Public Finance Management Act, the Municipal Finance Management Act and the Financial Intelligence Centre Act, explained the Treasury.

The MFMA did not allow municipalities to bank with mutual banks, buy only with a fully registered bank.

Photo Credit- Joburg Post

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