SARB's Naidoo: We warned VBS on its reliance of huge depositors | Fin24
 
In partnership with
Loading...

SARB's Naidoo: We warned VBS on its reliance of huge depositors

Mar 20 2018 13:14
Khulekani Magubane

Cape Town - In his presentation to the Standing Committee on Finance, South African Reserve Bank registrar Kuben Naidoo raised concerns including deficient compliance culture, weak asset and liability management, potentially illegal municipal depositions and poor quality in regulatory reports.

The Reserve Bank told the committee on Tuesday that VBS had been warned of the risk attached to municipal deposits that it allowed on more than one occasion but said these practices continued.

Last year National Treasury issued and instruction to municipalities to discontinue these deposits.

Naidoo said in September 2015 and September 2016 it warned VBS Mutual Bank against its practices where it related to the municipal deposits.

He said in spite of efforts to turn things around for VBS, the bank did the opposite.

“VBS was warned against reliance placed against the ten largest depositors, with municipalities the largest. VBS was alerted against the increasing sectorial concentration of municipalities and worsening liquidity mismatch positions,” Naidoo said.

The SARB said in August of 2017 VBS was advised to seek alternative liquidity contingency plans in the event of total municipality deposit outflow.

Naidoo said the bank failed because its management repeatedly failed to heed the Reserve Bank’s advice.

“Not only did they fail to heed our advice and reduce the risk that they were exposed to, they went in the opposite direction. We have asked them repeatedly to apply for a commercial banking license to allow them more scope than a mutual bank and to allow us more room for supervision,” he said.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

sarb  |  vbs bank  |  kuben naidoo  |  companies  |  financial services
NEXT ON FIN24X

 
 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Would you switch to a bank that rewarded you for 'good' financial behaviour?

Previous results · Suggest a vote

Loading...