VBS bank could be saved, Tito Mboweni suggests in budget speech
The mutual bank's pre-heist model is appropriate to encourage transformation of the banking sector, the finance minister told MPs
Finance minister Tito Mboweni has given the strongest indication yet that the embattled VBS Mutual Bank could be saved.
Various ANC MPs and those from the EFF have called for the bank, which was placed under curatorship in March after looting by executives led to a liquidity crisis, to be recapitalised.
“As we deal with VBS matter it is important we do not throw the baby out with the bathwater … the model of VBS [encouraging a savings culture and uplifting poorer communities] … before the great heist was correct … as part of the model to transform banking sector. We will work with regulator to ensure that that the model doesn’t disappear," Mboweni said as he delivered his medium-term budget policy statement (MTBPS).
However, he added that the “perpetrators of the great bank heist must be locked up after a fair trial”.
The investigation into VBS's affairs has shown how executives looted nearly R2bn from the bank, with a number of senior provincial ANC politicians also implicated in wrongdoing. Of this, R1.2bn belonged to 14 municipalities, mainly in Limpopo and the North West — money they are unlikely to recover.
“The funds lost by municipalities in the collapse of VBS offer dramatic illustration of how greed and corruption impacts the achievement of developmental objectives,” said Mboweni.
“ But this is not the only case in which public funds have been diverted to benefit a few greedy individuals. There are many cases where projects are manufactured, contracts are awarded corruptly and construction costs are inflated, or where corrupt practices have taken hold in the provision of land use rights.
"The National Treasury will work closely with the department of co-operative governance and traditional affairs to deal with financial misconduct in all spheres of government.”
Mboweni added that poor depositors had not lost any money. “They have been paid through the arrangement made by the regulator and another bank … the biggest losers have been shareholders and municipalities,” said Mboweni.
The Treasury provided guarantees for ordinary depositors up to the value of R100,000, with money accessible through Nedbank.