Financial Mail's deputy editor Sikonathi Mantshantsha has given his analysis into the operations of the VSB Mutual Bank, which has been placed under curatorship.
The bank came into the spotlight in 2017, when it loaned former president Jacob Zuma R7.8 million to settle his Nkandla debt.
According to Mantshantsha, in the year that ended in March 2016, VSB made R4.8 million profit and later lent Zuma double that amount.
I am not saying it was the loan that caused the problems that the bank has, I am just saying that its lending practices leave a lot to be desired.— Sikonathi Mantshantsha, Deputy Editor at Financial Mail
The average home loan of the bank's clients is R400 000. They went against that to fund a man from Nkandla, who is not bankable. They gave him 20 times their average loan.— Sikonathi Mantshantsha, Deputy Editor at Financial Mail
Mantshantsha explained what it means to placed under curatorship and what will happen to the bank's clients.
Curatorship means the mangers and shareholders have been pushed aside by the Reserve Bank and the SRB will take over through SizweNtsalubaGobodo Inc.— Sikonathi Mantshantsha, Deputy Editor at Financial Mail
The same happened to African Bank. Everyone who invested had to lose money in order to save the business and this is going to happen to VBS.— Sikonathi Mantshantsha, Deputy Editor at Financial Mail
It just means a new pair of hands and the new guide being the shareholder will guide the bank back to health and if there 's still anything left in terms of value for the investors, they will get some of their money back.— Sikonathi Mantshantsha, Deputy Editor at Financial Mail
Mantshantsha says deposits into the bank will not be affected, while people who want to withdraw less that R50 000 can still do that. Withdrawals above R50 000 will be placed under curatorship.
To hear the rest of the interview with Sikonathi Mantshantsha, listen below:
This article first appeared on CapeTalk : Fate of VBS Mutual Bank lies in hands of curators