The Reserve Bank and the curator of VBS Mutual Bank have reached an arrangement with Nedbank to facilitate the payout of funds to VBS Mutual Bank clients who have been desperate to get access to their funds since the bank was put under curatorship.
South African Reserve Bank governor Lesetja Kganyago announced on Monday that the arrangement followed a decision last week to secure guarantees from National Treasury of up to R100 000 per depositor for VBS Bank retailer depositors.
Retail depositors guaranteed the payout include “individuals, burial societies, stokvels and servings clubs. The guarantee does not cover municipalities or cooperate deposits,” explained Kganyago.
In March the finance minister, upon recommendation by then registrar of banks, placed VBS Mutual Bank under curatorship after it was unable to pay depositors their money following an exposé that revealed that the bank had been looted for more than R1.5 billion by its own management.
However, to manage cash constraints at the bank a daily limit of R1000 was placed on retail depositors.
Kganyago, however, said he was pleased to announce that from Friday retail depositors would be able to access all their funds up to the guaranteed R100 000 which would be facilitated through Nedbank.
“The criteria to choosing Nedbank included proximity to depositors, cost structure, speed of execution, the provision of a similar type of services as VBS Bank as well as advise provided by the curators of VBS Mutual Bank,” said Kganyago.
How do VBS depositors access their funds:
• The process by which to do so commences on July 13;
• Retails depositors can visit any Nedbank branch from Friday;
• They have to be in position of their South African identification document or an equivalent as well as a bring their proof of residence;
• Nedbank will also use a biometric system linked to the department of Home Affairs to verify identity of the depositor;
• Retail Depositors will also be asked to sign an agreement giving over their right to a claim in VBS upon receipt of the amount up to 100 000;
• Nedbank will then open an account for the depositors and load the account with a balance equivalent to the amount of the guarantee; and
• Each individual will be given a bank card, however, burial societies, stokevels and servings clubs will not be given bank cards and can only make transactions at Nedbank branches.
97% of the 22 700 retail depositors with VBS accounts would receive all their money back explained Kganyago.
“What happened at VBS Mutual Bank is fraud. It’s not the responsibility of the reserve bank but rather members of the VBS board to detect fraud. But in this case where the board were the ones who committed the fraud we will continue to work tirelessly to ensure that all clients recover all their money,” said Kganyago.
The Democratic Alliance on Monday laid fraud, racketeering and corruption charges against VBS executives following allegations that the bank’s directors, Vele Investments and its shareholder, had defrauded the bank of more than R1.5 billion.
The party’s shadow minister of cooperative governance and traditional affairs, Kevin Mileham, said “we call for an investigation by the South African Police Service into whether the bank’s directors paid millions of rands to the Public Investment Corporation and Passenger Rail Agency of SA executives, and politicians, to facilitate deposits of public funds with the bank.
“Residents of several municipalities now face the prospect of having no access to basic services as a result of this illegal depositing, mismanagement and plundering of public monies. It is therefore necessary that the affairs of the institution and the municipalities involved are probed in the interest of citizens and ensuring service delivery.”
The South Africa Federation of Trade Unions also expressed anger that workers and the poor were set to be the main victims of the bank collapsing, and the Economic Freedom Fighters called on individuals who mismanaged funds to be blacklisted and prosecuted to save the bank.
Since the guaranteed R100 000 payouts do not apply to municipalities and cooperate accounts, mayors of Limpopo Municipalities that deposited funds in the VBS Mutual Bank would this week update Minister of Cooperative Governance and Traditional Affairs Dr Zweli Mkhize on remedial action into the debacle.
The update followed a June 19 meeting between Mkhize and the mayors.
“The municipalities have been asked to submit a report on plans to mitigate the impact of the debacle including remedial action to be taken against officials and any other person that may have transgressed the law,” Mkhize’s office said on Sunday.
The meetings will form part of the minister’s two-day oversight visit to the province where he is set to deal with a raft of matters which include the interventions in the province’s seven distressed municipalities.