• VBS Mutual Bank could be placed under curatorship this week because of its low cash reserves, City Press reported.
  • The liquidity crisis comes after municipalities were informed they can not legally keep their money with VBS.
  • The bank says its great sin was its loan to Jacob Zuma – and claims not all banks are treated equally. Especially black ones.

The Reserve Bank could place VBS Mutual Bank under curatorship as early as this week – according to its own executives – City Press reported on Sunday.

The newspaper published excerpts from what it described as a "strongly worded letter" from VBS chairperson Tshifhiwa Matodzi, in which he accused the Reserve Bank of creating the impression that black management is incompetent.

The Reserve Bank had also failed to protect the bank when it was attacked for giving a loan to then President Jacob Zuma, Matodzi reportedly said.

Zuma used a loan from VBS to repay the state R7.8 million of the several hundred million rand spent upgrading his private homestead in Nkandla, KwaZulu-Natal – so shooting the tiny and virtually unnoticed bank to prominence.

NKANDLA, SOUTH AFRICA An overview of the new home for South Africa president Jacob Zuma's in his birth village on October 10, 2012 in KwaNxamalala, Nkandla. Photo by Per-Anders Pettersson

With the attention came allegations and investigations unrelated to Zuma. Among the questions suddenly raised was whether municipalities were keeping cash with VBS.

Read the fully City Press article: VBS Bank goes bust

About six months ago VBS learnt that the national treasury had sent municipalities a letter to tell them they could not invest money with VBS, City Press reported. Municipalities apparently started withdrawing their money, causing a liquidity crisis that is now becoming dire enough to warrant intervention to keep the bank afloat.

Unless the Public Investment Corporation, which manages state pension funds, invests some R1.5 billion into the bank soon.

Receive a single WhatsApp message every morning with all our latest news. Sign up here.

See also: