VBS clients to access funds from Friday

Clients of troubled VBS Mutual Bank will now be able to access their funds after intervention from National Treasury.

VBS was placed under curatorship in March after it experienced liquidity challenges over 18 months. Problems included a failure of the board of directors and executive management to manage the bank’s rapid growth funding and its liquidity.

Today, we are pleased to announce mechanisms to repay qualifying VBS retail depositors, South African Reserve Bank (SARB) Governor LesetjaKganyago told reporters at a press briefing on Monday.

Kganyago said the resolution came after discussions with Treasury.

Government has provided a guarantee to the SARB to facilitate the repayment agreement for all retail deposits up to R100 000 per retail depositor, starting from Friday.

When the bank was placed under curatorship in March, the SARB had said all retail deposits up to the amount of R50 000 per depositor would be guaranteed. The relief was for retail deposits from individuals, burial societies, stokvels and savings clubs. However, the guarantee does not cover municipal or corporate deposits.

Depositors will able to access their funds through Nedbank.

After considering several options, and based on specific criteria for how we could give retail depositors access to their funds, we have decided to use Nedbank to facilitate the repayment of retail depositors.

The criteria for selecting a repayment medium included proximity to depositors, cost structure, speed of execution, the complexity of having multiple mediums as well as the advice provided by the curator of VBS.

We also looked for a pay-out institution that specifically provides similar types of products as VBS offered to its customers, in case VBS clients should choose to leave their deposits with the pay-out institution, said Kganyago.

Retail depositors will have to visit their nearest Nedbank branches and produce authentic identification to access their funds.

Retail depositors will be asked to sign an agreement ceding their rights to their claim in VBS to the SARB up to the amount of R100 000 of their deposit, the governor said.

To facilitate the smooth transfer of personal and account data from VBS to Nedbank, VBS branches will not be able to provide cash withdrawal services from Tuesday (July 10), Kganyago said.

A forensic investigation, headed by Advocate Terry Motau, into possible fraud and malfeasance by VBS is ongoing and set to be concluded in late August or early September.

Initial findings of the investigation were made available to the curator by the SARB. The curator has used these preliminary findings from the investigation to launch urgent applications to take steps to recover monies owed to VBS, Kganyago said.

Source: South African Government News Agency