VBS cannot be revived, Reserve Bank confirms

The South African Reserve Bank (SARB) says the banking licence for the old VBS Mutual Bank, in its old form, cannot be revived.

The Reserve Bank said it has received a number of letters from parties interested in reviving the Venda Building Society (VBS) Mutual Bank.

VBS was placed into liquidation by the High Court on 13 November 2018. The bank is currently being liquidated, the collection on loans is continuing and assets are being sold to recover monies owed to depositors.

The SARB said it has provided R261 million, covering over 97% of retail depositors, who originally deposited with VBS Mutual Bank.

To date, the Reserve Bank said over 98% of deposit balances guaranteed by government have been claimed.

“The banking licence under which VBS Mutual Bank operated was suspended. VBS Mutual Bank, in its old form, cannot be revived. The SARB cannot give that licence to someone else or to another entity,” the Reserve Bank said in a statement.

The Reserve Bank said if anyone wishes to apply for a new mutual or commercial banking licence, they are welcome to do so, and any party wishing to buy any of the assets of the old VBS Mutual Bank may do so, through the liquidator.

“They can also apply to use the name VBS or Venda Building Society, with the permission of the courts (and, in this case, the community involved). This process would be similar to the new licence granted to the resuscitated African Bank after the old African Bank was placed into curatorship in 2014.

“A banking licence application is, however, for a new licence and the applicant would need to meet the financial and prudential requirements of the particular licence that they are applying for (licence conditions for mutual banks, cooperative banks and commercial banks differ),” the Reserve Bank explained.

The SARB said the application process for a banking licence is relatively long and can take between one and two years.

The SARB and the Prudential Authority (PA) have welcomed any engagement with communities and other interested parties seeking to enter the financial sector.

“We stand ready to advise and guide applicants through what is a long and complex process. We remain committed to ensuring a safe and sound financial sector, which meets the transformational and financial inclusion objectives of government,” the Reserve Bank said. – SAnews.gov.za

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