We are not happy that VBS collapsed - Gungubele | Fin24
 
  • Medical Schemes

    SA’s three biggest have announced their price hikes – here’s how they compare.

  • Warning

    'Make sure you have enough money on Thursday,' says banking union as thousands threaten strike.

  • Fin24’s newsletter

    Sign up to receive Fin24's top news in your inbox every morning.

Loading...

We are not happy that VBS collapsed - Gungubele

Oct 31 2018 18:59
Lameez Omarjee, Fin24

Government is not taking pleasure in the collapse of VBS Mutual Bank, said Deputy Finance Minister Mondli Gungubele.

The deputy minister on Wednesday fielded questions intended for Finance Minister Tito Mboweni, in the National Assembly about Treasury's response to the VBS Mutual Bank matter.

The bank was placed under curatorship in March this year, as it was facing a liquidity crisis.

The SA Reserve Bank (SARB) has since made public the report of the curator's investigation of what went wrong at the bank. The SARB has since filed court papers for the liquidation of the mutual bank.

Economic Freedom Fighters (EFF) MP Mbuyiseni Ndlozi asked Gungubele why government is rushing to shut down VBS and if it was perhaps because the bank was in the hands of "rural" and "black" people.

To this Gungubele responded: "We will never take pleasure or get excited when any of our institutions collapse. It does not send a good message. We can't be happy about this one."

The deputy minister explained that VBS Mutual Bank particularly helped in achieving government's goal of improving financial inclusion. "Even with noble intentions, the law must take its course," he said.

Gungubele highlighted that there are key imperatives for financial institutions to receive banking licences. Once a bank has a licence, it must stay within the framework of the licence. "If not, there is always going to be an intervention of law to sustain the credibility of the financial system," he said.

'Bank in the wilderness'

Gungubele further said the bank was in the hands of qualified people, like chartered accountants and was not a "bank in the wilderness". "It was in proper hands of people who had reason to be trusted they would take care of it."

Inkatha Freedom Party MP Mkhuleko Hlengwa asked the deputy minister if Treasury was going to be proactive and undertake assessments of banking practices to ensure they comply with regulations, as opposed to being reactive.

"Why is intervention always reaction? Why are you afraid of banks? Challenge them and take them on to safeguard the interests of people," Hlengwa said.

To this Gungubele responded that SA's financial system has a credible record, but it does not mean that there will never be slippages. "A lot of processes are taking place and we continue to learn from weaknesses that will be exposed, and we commit to do better," Gungubele said. 

DA MP Alf Lees asked if Treasury would revise banking regulations as a result of what has happened at the mutual bank.

To this Gungubele replied that government will always be open-minded about legislation, if it will improve the soundness of the financial system and ensures the sovereign rating stays "where it is supposed to".

He added that VBS was made aware that if it wanted to take on functions of a commercial bank it could apply for a licence, which it did not do.

Lees later asked if an investigation has been undertaken to review the actions taken by Treasury, and to review any shortcomings by Treasury's response to prevent a similar occurrence from happening.

To this Gungubele said in dealing with the matter, Treasury will not run way from any weaknesses exposed on the part of Treasury, which may be revealed in the final report.

"If the investigation and the process expose particular weaknesses on our side, we are committed to deal with that."

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

What's your view on deep sea mining?

Previous results · Suggest a vote

Loading...