By Pinky Khoabane
WHAT happened at VBS Mutual Bank is nothing short of a hostile takeover. It illustrates, once again, how regulations by governments working in cahoots with the big boys of business simply kill the smaller players. When VBS lent former President Jacob Zuma a loan and came into prominence, it’s dealings came under scrutiny.
On Sunday, Governor of Reserve Bank Lesetja Kganyago placed VBS under curatorship. VBS had apparently flouted mutual bank laws by accepting deposits from municipalities in violation of the law. In the letter by VBS Chairman Thifhiwa Matodzi to Kuben Naidoo of treasury, it is clear that once the bank became aware of the possible violation, it approached treasury for clarity. Treasury instead of responding simply ignored them while on the other hand, it kept instructing municipalities to withdraw the money from that bank. This caused a liquidity problem for the bank, to which it sought to find a solution by writing letters to treasury.
Treasury if it was acting in good faith, could have asked the municipalities to withdraw the money over a period of time to allow for sustainability of the bank. But it didnt. It wanted the bank to crash.
It could have even issued a commercial licence to ensure the developmental agenda of our country is met – safeguarding a small bank whose shareholding is Black from collapse. That is what radical economic transformation requires – bold moves which are meant to bring Blacks into mainstream economy. The apartheid government gave their Afrikaner banks bailouts to help sustain them. Democratic SA wouldn’t, it wanted the bank to crash.
But there’s also the puzzling case of Public Investment Corporation (PIC), which has a 27% in VBS, seemingly not being aware of the mutual bank laws. VBS’ growth strategy included seeking business from municipalities, why didnt PIC flag this as a violation?
If stories going around that the curator was already known during the first week of March, despite meetings between the parties, seeking solutions to the problem, then this curatorship is forced – forced to ensure the bank collapsed allowing for new ownership.
It is a sad day for Black entrepreneurship and flies in the face of the much talked about need to bring Blacks into the mainstream economy. A survey by 27four Investment Managers, which measures transformation in the financial sector, says that, of the R4.6-trillion industry assets, only R415.5-billion — or 9% — is managed by black firms. We ought not be deterred by this move by bullies but instead we ought to all boycott the commercial banks and take our money to VBS. We at UnCensored already have, in line with our decision to Buy Black and Bank Black. Imagine all those stokvels, if they could take their money to VBS?
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