 PIC undertakes to cooperate with VBS Mutual Bank Curator. Cape Town, the Public Investment Corporation, PIC, one of the main shareholders of VBS Mutual Bank, said it will cooperate with the bank's curator to find a way forward for the institution. In a statement issued on Monday the PIC, which has a 27% shareholding in VBS, said it has noted the South African Reserve Bank's, SARB's, decision to place the bank under curatorship given its liquidity crisis. SARB Governor Lisette Jacque Gignago made the announcement at a press briefing on Sunday. The central bank became aware that VBS received a large number of deposits from municipalities 18 months ago, which it viewed as risky because the bank used the short-term deposits for long term loans, Deputy Governor Cuban Nadu said at the briefing. In August 2017, following its own investigation of the legal implications of municipalities investing in mutual banks, Treasury issued a circular informing municipalities not to place deposits with VBS. This is because it is forbidden by the Municipal Financial Management Act. As a result, a number of municipalities made withdrawals amounting to R1BN, City Press reported. Nadu said that municipalities had over R1.5BN in deposits at the bank. Nadu said the SARB engaged with the bank's shareholders, which include the PIC as well as the VBS Management and Board, to reach a solution for its liquidity crisis when it came to light in February 2018 that VBS was unable to honor an obligation in the national payments system. Nadu said it is unlikely that the shareholders would be able to provide the necessary cash injection in time to manage the liquidity crisis. After an exhaustive process of engaging with the Board, management, and shareholders, there was no other solution besides curatorship, he told journalists. The PIC however said it will work closely with the curator's size we and Salyabha Govado and other stakeholders to assist the bank, which will hopefully emerge much stronger. Nadu said the curator will likely develop a plan to manage liquidity going forward. In the meantime, people with loans from VBS should continue paying them off. The bank will continue to operate its transactional accounts and will be recovering loan repayments, he explained. Those with small deposits of less than R50000 will be able to access their money overnight, he said. We are appealing to people with deposits at the bank to understand that it is protected and government is protecting those deposits. Following the briefing on Sunday, Treasury issued a statement indicating that curatorship is a better option than liquidation. The aim of curatorship is ultimately to turn the mutual bank around. This is in contrast with liquidation, where the mutual bank is closed down, said Treasury. The curator is given the legal means to create the necessary mechanisms to implement a resolution plan which will ensure the long-run sustainability of VBS. The recent example of African Bank, which emerged as a stronger bank after curatorship, should be noted. Treasury explained that restricting municipalities from investing in mutual banks is consistent with ensuring municipal funds are managed responsibly. The Black Business Council, BBC, however raised concerns that neither the SARB nor Treasury consulted it in the decision to place VBS under curatorship. Chief Executive Officer Kay Ganki Madabane said in a statement. We remain deeply concerned due to the fact that the SARB and National Treasury did not take the BBC into confidence on the matter affecting a black bank, he said. The BBC said it is engaging with Treasury, VBS, and the SARB to find amicable solutions for VBS. FIN24 is yet to receive responses to queries sent to the BBC and VBS.