In another stroke to shut down black owned institutions that are trying to compete in South Africa’s highly saturated and untransformed financial services sector – the South African Reserve Bank (SARB) through the instruction of National Treasury has moved to place VBS Mutual Bank under curatorship, effectively liquidating the institution.
The move by the SARB has received widespread back lash from political parties, lobby groups and NGOs who are accusing the institution as well as National Treasury of deliberately trying to thwart the bank’s progress in order to halt Radical Economic Transformation.
Media reports suggested that last year, the National Treasury issued a directive to municipalities to not bank with VBS in order to comply with the Municipal Finance Management Act (MFMA).
The banning of municipalities to stop banking with VBS has put the institution on the verge of collapse which was exacerbated by the SARB’s decision to place the bank under curatorship. The harsh action is largely viewed as a contrast to how other white owned banks such as Capitec have been treated with kid gloves after they have been accused of financial mismanagement and irresponsible lending practices from research institutions such as Viceroy.
What this means is that more than R1 billion has been withdrawn by municipalities from the bank which has created a liquidity crisis for the institution. The only way out of its current predicament is if the PIC injects more cash into the entity.
Since Cyril Ramaphosa came into power as president of the ANC and the country, there are media institutions which have been muzzled such as ANN7, the Sunday Independent (through the sacking of its editor Steve Motale) and now VBS Mutual Bank which provided former president Jacob Zuma to pay back parts of money he owed for upgrades at his Nkandla homestead in KZN.
After adopting a pro-Radical Economic Transformation narrative, ANN7’s contract was terminated when Ramaphosa took over as ANC leader.
In addition, Nhlanhla Nene, who made the directive that has now effectively crippled VBS as the minister of finance at the National Treasury was sacked in December 2015 from his position by former president Jacob Zuma.
His reappointment came in a recent cabinet reshuffle that is widely viewed by critics as a return of the old guard which is highly anti-Radical Economic Transformation.
The ruling party, at its last elective conference in December 2107 had made an undertaking to transform the financial services sector by issuing full licenses to black owned banks. It had also resolved to nationalise the South African Reserve Bank.
With the latest series of events, it looks like the current leadership is going against some of the major economic directives that were resolved at the conference and is instead pursuing an approach that aims to curtail Radical Economic Transformation at every turn.
Tembakazi Mnyaka, the Chairperson of the Progressive Professionals Forum (PPF) said on Sunday evening that it cannot be that the ANC led government is seen as going against Radical Economic Transformation. “They are actively suffocating the only black owned mutual bank through anti transformation laws instead of instructing the PIC to expedite a bail out, granting a commercial licence and providing for a deviation in the interim.
“Mr Ramaphosa must intervene urgently to stop the artificially created crisis and ensure that this matter is amicably resolved without delay. It cannot be celebrated that an ANC led and run government promotes laws that hinder and destroy blacks that do business with government. The ANC must be advocates on transformation in theory and in practice in order to maintain the integrity of its revolutionary messages,” he said.
Tshifhiwa Matodzi, the chairman of VBS has since resigned after publishing a heart felt letter to the South African Reserve bank where he stated that VBS was never treated the same as the others and was “never welcome in this exclusive system”.
“It is clear that our greatest sin was to give the former president a loan and running a successful black bank. We are not politicians, we are just doing our job and we did it very well. The former president is now a proud owner of a bonded rural home fully registered with the deeds office, something which many respected experts considered impossible. To date, none of my board and executive including myself have ever met the former president personally, just like we have never met the thousands of home owners whose loans are with the bank,” said Matodzi.
Below is Mr Matodzi’s letter to the SARB