VBS Mutual Bank Shareholders

VBS Mutual Bank Shareholders

Shareholding profile
Authorised share capital comprises of 3 classes of shares namely:
• Permanent interest bearing shares (Class A);
• 72 month fixed period shares (Class B); and
• 60 month fixed period shares (Class C)


Each have a nominal value of R10.
At the end of the current financial year only permanentshares (Class A) to the value of R70.47 million were in issue. An amount of R1.25 million worth of permanent shares (Class A) is reserved for an employee share incentive scheme.

The bank’s majority shareholders are the Public Investment Corporation (25.26%) and Dyambeu Investments (Pty) Ltd (25.22%).



A group comprising more than 1 000 individual shareholders in VBS Mutual Bank pledged their support to the newly appointed curator and said that everything possible must be done to normalise the situation at the bank.

VBS Mutual Bank was placed under curatorship by the SA Reserve Bank earlier this month. The SA Reserve Bank’s deputy governor, Kuben Naidoo, announced on 11 March that they had no other option than to place VBS under curatorship to try and safeguard the interests of all concerned.

The VBS Mutual Bank Shareholders Forum, comprising more than 1 000 individual shareholders, had a meeting in Thohoyandou on Friday afternoon. During this meeting, it was resolved that “all members … will go an extra mile to assist and normalize the current situation.”

In a statement released by Sigama Attorneys on behalf of the forum, it is emphasized that the customer base of the bank must be protected and assured of the future of the bank. “The forum … is willing to contribute money per shareholder. This money (is) to be ring fenced and (must) be used to pay depositors who want to withdraw more than what the curator has suggested as a maximum withdrawal,” the statement reads.

Limitations on the amounts clients may withdraw from the bank are still in place. Reserve Bank governor Lesetja Kganyago said all deposits under R50 000 were available and accessible immediately, but withdrawals larger than this amount would still take some time to be processed. A limit of R7 500 was seemingly placed on individual withdrawals.

“The curator agreed that he’s willing to consider funeral claims of more than R7 500 if the family produces all relevant documents,” the forum statement reads.

VBS Mutual’s problems were also discussed in parliament during the past week. Naidoo told parliament’s Standing Committee on Finance last Tuesday (20th) that the Reserve Bank had to intervene when serious liquidity problems at VBS emerged.


It was explained to the Standing Committee that the problems started in 2015 when VBS started taking large deposits from a small number of municipalities. The bank used the money for long-term loans, which was a dangerous practice. Municipalities are expected to spend their annual budgets before the financial year-end, which effectively means such deposits should always be regarded as short-term investments.

Naidoo told the Standing Committee that, over a period of 18 months, VBS’s board and management continued to disregard warnings from the Reserve Bank. “We now know that what they’ve done is exactly the opposite,” he said. Figures provided by the National Credit Regulator suggest that, at the start of 2016, VBS had a mortgage loan book of R240.3 million, and R48.8 million in secured credit, mostly vehicle finance. Less than two years later, its books showed mortgages to the value of R425.3 million and secured credit worth R211.7 million. This was a total growth of over 120% in just 21 months. (Source:

The big problem seems to be the bank’s canvassing of municipalities, even despite warnings that this can be viewed as a transgression of the Municipal Finance Management Act. Mutual banks have limited licences, which do not have similar safeguards as full banking licences, and municipalities were warned not to invest in such institutions.

Municipal deposits at VBS grew from R1.063 billion at September 2017 to R1.580 billion at March 2018. The number of municipalities holding such deposits increased from 12 to 16. The list of municipalities investing at VBS included the Vhembe District Municipality and Makhado Municipality.

National Treasury’s deputy director-general, Ismail Momoniat, told the Standing Committee that two municipalities in Gauteng (R130m invested), nine in Limpopo (R1.12bn invested) and four in North West (R330m invested) had R1.5bn invested with the bank in total. He was worried that the unavailability of funds invested by municipalities in VBS would affect service delivery, as these deposits are not guaranteed.

The Reserve Bank had previously requested a liquidity injection from VBS’s two major shareholders – Vele Investments and the Public Investment Corporation. This had not been forthcoming, and curatorship was the only option, the Standing Committee was told. “We put it under curatorship, not because we wanted to,” said Naidoo. “This bank has failed because the board and management repeatedly refused to heed our advice and recommendations.”


It seems very likely that steps will be taken against VBS Mutual Bank. Naidoo told the Standing Committee that he believed that a commission of inquiry and a forensic investigation into the collapse of VBS Mutual Bank was likely. He said that action would be taken against those found to be responsible for any malfeasance or fraud uncovered, as it was critical that consequences were seen to result from remedial action. He referred to “inadequate and questionable governance and risk management practices” at VBS.