SOLVENCY PROBLEM
VBS may be unable to meet its obligations, says Kuben Naidoo
VBS Mutual Bank may not be able to continue as a going concern, as fresh uncertainty arises over the bank’s ability to meet its long-term financial obligations. "It appears as though VBS has not just a liquidity problem, but a solvency problem," registrar of banks and deputy Reserve Bank governor Kuben Naidoo said on Tuesday. "I was reasonably confident we could save it [when it was first placed into curatorship], I’m slightly less confident now," Naidoo said. Liquidity refers to a company’s ability to meet short-term cash-flow needs, while solvency refers to its ability to meet long-term debt obligations. Naidoo was speaking at a roundtable discussion on black-owned banks, hosted by the Association of Black Securities and Investment Professionals. The Bank placed VBS into curatorship in March following a cash crunch brought on by the withdrawal of deposits by municipalities. There was a social media backlash, as well as pushback from VBS management as the bank was black-owned. Comm...
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