Banking Association of SA backs Sarb on VBS curatorship

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File: Venda-based VBS Mutual Bank shot to prominence in 2016 when it lent former president Jacob Zuma R7.8-million.

JOHANNESBURG - The Banking Association South Africa on Thursday said the SA Reserve Bank (Sarb) acted within its mandate and the law and independently of special interests when it placed VBS Mutual Bank into curatorship.

The black-owned bank, which experienced liquidity problems, was placed under curatorship on Monday.

WATCH: VBS Mutual Bank placed under curatorship

"In placing VBS Mutual Bank into curatorship, the Reserve Bank acted within its mandate and the law and independently of special interests. The primary purpose of placing a bank under curatorship is to protect depositor’s money and the national financial system, while the business is placed on a sound footing," said BASA.

READ: VBS curatorship to turn bank around: Treasury

The banking association added that it "has full confidence in the Reserve Bank. Its actions underline the importance of having an independent, impartial reserve bank that protects the interests of all South Africans".

Sarb has been criticised by some sections of society for failing to support the black-owned bank. They blame the reserve bank for the crisis because it instructed municipalities not to bank with VBS citing licence limitations.

The banking association said while it remains committed to the transformation of the financial services industry, increased competition and empowered management and ownership, this must be done in a way that creates sustainable businesses.

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"All South African banks must adhere to the letter and spirit of the law and be able to fulfill their legal duty of care to those who entrust their earnings to them," said BASA