Lesetja Kganyago. Picture: TREVOR SAMSON
Lesetja Kganyago. Picture: TREVOR SAMSON

"Absolutely no," was the response, on Wednesday, of Reserve Bank governor Lesetja Kganyago to the proposal that VBS Mutual Bank be taken over by the Limpopo government through its economic development agency.

The proposal apparently emerged from ANC members in Limpopo and was reportedly presented to the leadership of the party.

VBS Mutual Bank is under curatorship and is the subject of a forensic investigation. Allegations have been made of significant looting of the bank’s deposits by its executives and shareholders.

Answering questions from members of parliament’s finance committee following his briefing on the state of the economy, Kganyago noted that the one bank, owned by a provincial government — Ithala Bank, owned by the KwaZulu-Natal provincial government — was a legacy issue and should not be replicated.

On the other hand, Kganyago fully supported the idea that VBS remain in black hands should it eventually be sold. However, he said prospective buyers should wait until its accounts had been finalised because, as yet, there was no indication of the extent of the "hole" and people needed to know what they were buying.

Deputy Reserve Bank governor Kuben Naidoo said one of the salient lessons the Bank had learnt from the VBS collapse was that it had overly relied on the audited financial statements submitted by VBS. These have been found to have been false. The Bank needed to find alternative ways of verifying the financial statements of banks, Naidoo said.

The data submitted by VBS to the Bank was not accurate and the auditors were part of the conspiracy so the Bank had not been able to pierce the veil, he said, adding it was a very serious offence for a bank to submit false information to the Reserve Bank, punishable by the loss of a banking licence and significant financial penalties.

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