How VBS Mutual Bank was plundered

The little known VBS Bank shot to national prominence when City Press in 2016 revealed that it was processing a loan application from Zuma for the R7.8 million he needs to pay for the Nkandla security upgrades.

The bank that came to the rescue of President Jacob Zuma Nkandla debt now faces a possible probe from the Financial Services Board relating to an R136 million loan.

In order to understand, what really happened at VBS Bank and when it actually became a structure and why it is in the limelight, Eusebius McKaiser sat down with Editor Financial Mail and Author of The Grand Scam Rob Rose.

READ: VBS Mutual Bank ‘severely mismanaged’, probably fraudulent – Sarb affidavit

Rose says mutual banks are a very specific thing and not like the traditional corporate banks.

They are smaller entities, there are fewer rules in place for them that govern how they operate. So VBS started in 1982 in the all traditional Venda area and was a Venda Building Society and has since grown a lot.

Rob Rose, Editor Financial Mail and Author of The Grand Scam

Also read:VBS acted illegally and knew it - Bongani Bingwa

Rose adds that the bank took on new shareholders in 2011 as it was in a bad place and the new shareholders put in a lot of money.

What happened over the next few years, is that it took on a lot of deposits from municipalities and that proved to be one of those sticking points, because of a mutual bank as an entity that is far less regulatory certainty of what it can do. Treasury didn't like them taking municipal deposits because they are far more uncertain.

Rob Rose, Editor Financial Mail and Author of The Grand Scam

You don't want a municipality losing R400 million which seems could be the case here and that is why Treasury put in place laws that say you cant do this. But in the case of VBS, it had been taking municipal deposits for quite a while.

Rob Rose, Editor Financial Mail and Author of The Grand Scam

He says VBS wanted to become a commercial bank partly because it would have resolved the issues with municipalities.

The other problem with VBS is that if a municipality deposits money, the bank works by, it takes deposits from you and it then lends that money out. So in this case, it was taking deposits from municipalities who could demand the money back on a short-term basis. They could say please pay me back the R500 million I deposited with you.

Rob Rose, Editor Financial Mail and Author of The Grand Scam

And then lending it out for things like mortgage loans which are for longer terms like 20 years. Or give loans to companies that could only repay over a certain amount of time. So there was a mismatch between the business strategy of VBS.

Rob Rose, Editor Financial Mail and Author of The Grand Scam

He adds VBS had R2,9 billion of depositors and all of those were 'smaller guys' like stockvels and a lot of vulnerable communities in Venda.

Rose explains how VBS went under curatorship.

Listen below to hear the whole history of the mutual bank...


Recommended

by NEWSROOM AI

702 welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the 702 community a safe and welcoming space for all.

702 reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

702 is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
Old Mutual Limited 'set free', lists on Johannesburg Stock Exchange

Old Mutual Limited 'set free', lists on Johannesburg Stock Exchange

The company also listed on stock exchanges in London, Malawi, Namibia and Zimbabwe. Bruce Whitfield interviews CEO Peter Moyo.

Old Mutual Limited returns home, begins countdown to Tuesday’s listing on JSE

Old Mutual Limited returns home, begins countdown to Tuesday’s listing on JSE

However far the stream flows, it never forgets its origin. Launched in 1845 in Cape Town, OM’s epic journey has come full circle.

Need a loan? How to improve your credit score (before you apply)

Need a loan? How to improve your credit score (before you apply)

Get a free credit report, then follow these five tips and see by how much you can improve your credit record.

Nthabeleng Likotsi is on course to establishing SA's first women-owned bank

Nthabeleng Likotsi is on course to establishing SA's first women-owned bank

Likotsi explains the vision for the bank which comes off the back of YWBN - a co-operative financial institution.

'Black Tax'... working hard, earning well, but struggling financially

'Black Tax'... working hard, earning well, but struggling financially

Young(ish) South Africans tell stories of the mixed emotions they feel when supporting family members, and tips from an advisor.

R200 000 compensation paid out to Lily Mine families

R200 000 compensation paid out to Lily Mine families

Two years ago, Pretty Nkambule, Yvonne Mnisi and Solomon Nyirenda were trapped underground and disappeared.

It’s official! Old Mutual Investment Group is the best managed company in SA

It’s official! Old Mutual Investment Group is the best managed company in SA

Top 500 Awards 2018 named Old Mutual Investment Group “Best Managed Company of the Year”, based on strict performance criteria.

Nedbank may in 2019 join Government in firing KPMG

Nedbank may in 2019 join Government in firing KPMG

Nedbank will reconsider its relationship with KPMG in 2019. The Money Show’s Bruce Whitfield interviews its CEO Mike Brown.

Lies, damned lies and VBS Mutual Bank's financial statements

Lies, damned lies and VBS Mutual Bank's financial statements

The Money Show’s Bruce Whitfield interviews VBS Mutual Bank curator Anoosh Rooplal.

It’s not only KPMG! Largest auditing firms not too big to fail – audit regulator

It’s not only KPMG! Largest auditing firms not too big to fail – audit regulator

The Money Show’s Bruce Whitfield interviews Independent Regulatory Board for Auditors CEO Bernard Agulhas.

Beleaguered KPMG working to rebuild its image

Beleaguered KPMG working to rebuild its image

KPMG Chairperson Professor Wiseman Nkuhlu explains how they are planning a brand overhaul.

'Not surprising KPMG acted quickly this time and suspended Sipho Malaba'

'Not surprising KPMG acted quickly this time and suspended Sipho Malaba'

Economist Bonke Dumisa questions why the issues around VBS bank were not picked up earlier by external auditors.

VBS Mutual Bank ‘severely mismanaged’, probably fraudulent – Sarb affidavit

VBS Mutual Bank ‘severely mismanaged’, probably fraudulent – Sarb affidavit

The Money Show’s Bruce Whitfield interviews Intellidex cofounder Stuart Theobald.

Could Gwede Mantashe be 'saviour' of mining industry?

Could Gwede Mantashe be 'saviour' of mining industry?

Deputy Editor at the Financial Mail Sikonathi Mantshantsha chats to Kieno Kammies about the financial week that was.

SARB denies VBS curatorship was down to bank being black-owned

SARB denies VBS curatorship was down to bank being black-owned

The South African Reserve Bank says VBS was warned against taking municipal deposits but went ahead anyway.

 VBS acted illegally and knew it - Bongani Bingwa

VBS acted illegally and knew it - Bongani Bingwa

Should people feel sorry for VBS Mutual because they were black-owned asks Bongani?

Why VBS Mutual Bank placed under curatorship

Why VBS Mutual Bank placed under curatorship

Economist at Econometrix, Sam Rolland says VBS's biggest crime was to accept short-term deposits from municipalities.

'My daughter bought Spur shares when she was 10 years old' - Dr Adrian Saville

'My daughter bought Spur shares when she was 10 years old' - Dr Adrian Saville

What does Citadel’s famed disciple of contrarian, deep-value investing Dr Adrian Saville hope for (and fear) about money?

Popular articles
 In the market for a 2nd hand car? Here are some tips to buy it on a budget!

In the market for a 2nd hand car? Here are some tips to buy it on a budget!

In the car feature, our very own car guy Tumelo Maketekete shares some tips and tricks to buying a car on a R100 000 budget.

Vigilante mob attacks alleged criminals in Daveyton

Vigilante mob attacks alleged criminals in Daveyton

Tensions are rife in the East Joburg township as the community attacked and killed criminals.

[Listen] Lottery responds to Tshepo's fraud claims

[Listen] Lottery responds to Tshepo's fraud claims

Philemon Letwaba says Tshepo's case relates to some of the issues that they are dealing with on a daily basis.

'Citizens have a right to ask for identification from police during a roadblock'

'Citizens have a right to ask for identification from police during a roadblock'

Major General Michael Mohlala explains the procedure of conducting a roadblock and what to do when you are stopped.

Gift of the Givers' Dr Imtiaz Sooliman – angel amongst men – talks about money

Gift of the Givers' Dr Imtiaz Sooliman – angel amongst men – talks about money

"I have no desire for clothes. I have no desire for holidays. I have no desire for outings. All I see is the suffering of people…"