13 November 2018

South Africa: 'Hopelessly Insolvent' VBS to Be Liquidated

Photo: VBS Mutual Bank
The VBS Mutual Bank website (file photo).
analysis

It took only minutes for the North Gauteng High Court to approve the liquidation of VBS Mutual Bank on Tuesday. Despite the debate over whether it should be rescued, the Reserve Bank's application was unopposed.

VBS Mutual Bank's operations will officially be wound up after the North Gauteng High Court ordered its final liquidation on Tuesday.

The application was brought by the SA Reserve Bank's (SARB) Prudential Authority and was unopposed despite some in the ANC, the EFF and minority shareholders calling for the bank to be revived.

Judge Johan Louw granted the liquidation application in a matter of minutes after the parties had agreed on a draft court order to place VBS under final rather than provisional liquidation.

SARB placed the bank under curatorship in March due to a liquidity crisis. An investigation by Advocate Terry Motau and Werksmans Attorneys detailed how R1.9-billion was looted by the bank's senior leaders and their associates as they enticed municipalities to make deposits, which were then siphoned out of the bank.

According to the law, the Master of the Court must appoint a liquidator recommended by the...

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