HILARY JOFFE: Illegal business model that placed municipalities at risk derailed VBS
The failure has been depicted as a result of the Reserve Bank’s ‘attack on a black bank’, but it was more about risk
The story of the failure of VBS Mutual Bank, which was put into curatorship on Sunday, has been dressed up by the bank’s chairman and by some in black business and the twitterati as an attack by the big Reserve Bank on a small but successful black-owned bank. In fact, it is a classic story of a small bank that chose to do business in a way that was excessively risky, making it all but certain that it would fall over sooner or later, taking shareholders’ and depositors’ money with it. The twist in the tail, probably, is that VBS could and did carry on doing risky banking with impunity because it had political cover, at least until December. Chances are that as curator Anoosh Rooplal and the regulators start getting to the bottom of what’s really inside the bank’s book over the next few months, the story could turn out to be more dodgy, and the fallout more sad, than anyone can guess at this stage. VBS was one of SA’s homeland legacies. Established in 1982 as the Venda Building Societ...
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