Deputy Minister of Finance Mondli Gungubele. Picture: ESA ALEXANDER
Deputy Minister of Finance Mondli Gungubele. Picture: ESA ALEXANDER

Deputy finance minister Mondli Gungubele says the VBS Mutual Bank model of offering banking services to underserviced poor communities must be sustained regardless of whether the bank is saved or not.

“We will never take pleasure or get excited when any of our institutions collapse … it doesn’t send a good message. The services VBS has been providing [are crucial] … with those noble intentions the law must take its course… The attitude of [the] Treasury is that the services of VBS must be sustained … if they are saved, we will be excited,” Gungubele said during a question and answer session in the National Assembly on Wednesday.

On Monday, the Reserve Bank Prudential Authority said VBS is “hopelessly insolvent” and should be wound up, as the purpose and object of the bank no longer existed. It was necessary to bring an end to the curatorship as it would enable a liquidator to use the mechanisms provided by the insolvency and company law legislation to recover money from recipients in terms of void and impeachable transactions, the authority said.

The bank was placed under curatorship in March after looting by executives led to a liquidity crisis. Various ANC and EFF MPs have called for the bank to be recapitalised. 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. Of the R2bn, close to R1.6bn belonged to 14 municipalities, mainly in Limpopo and the North West — money they are unlikely to recover.

EFF MP Mbuyiseni Ndlozi asked Gungubele why there was a reluctance to save VBS. He pointed out that many banks that were placed under curatorship in the past were saved.

“Is National Treasury taking responsibility? Why such a rush to liquidate VBS? Why shut it down?” asked Ndlozi.

Gungubele reiterated that the law must take its course and the prudential authority had considered several indicators before coming to its conclusion. The deputy minister also said SA’s financial services sector remained in good health despite the issues at VBS.

“We want to say that we have always had a number of measures to ensure that our financial sector stays credible… It’s very difficult for [the] Reserve Bank and [the] Treasury to be in every institution. At VBS we had well-qualified people running it … all I am saying is we will continue to do inspections, monitor and evaluate … the financial sector in SA has a credible record except for those isolated incidents like VBS,” said Gungubele.

“We have been getting credits … we have been rated in terms of how we run our financial sector … it doesn’t mean we don’t have slippages… We commit to improve in this matter … we continue to learn and we commit to do better,” he said.