Expect to hear a lot more about VBS Mutual Bank. Until President Jacob Zuma secured a mortgage through VBS Mutual Bank, few South Africans had heard of this financial services provider. Its CEO Andile Ramavhunga has revealed that its plans to expand across South Africa are well underway. He spoke to Power FM98.7 this week, saying that he could confirm that Zuma had received funding from the bank – but noted he could not divulge the finer details of the transaction for reasons of client confidentiality. Ramavhunga said the Public Investment Corporation (PIC) acquired a stake in VBS Mutual Bank before 1994. The Venda king is also a shareholder, he said, but the “ultimate buck still stops with the board”. He conceded that this Zuma deal was a little different from the usual transactions the bank handles. However, Ramavhunga said the bank has been a “success story in the two or three years we have taken over” and is delivering valuable services to its core communities. VBS Mutual Bank will have a branch in all major townships soon. In addition to mortgages, it offers vehicle financing and funds energy related products. When asked by a 70-year-old listener with only a year or two left on his contract whether he too could get a big multi-million mortgage and pay it off over many years, the CEO said that approving such a transaction would be linked to the “structure”. Ramavhunga said the PIC has supported the bank in its turnaround strategy. The PIC is one of the largest investors in South Africa. It is owned by the South African government and invests funds on behalf of public sector entities. Ramavhunga can expect to get many more questions, as the controversy around how Zuma is repaying the money for his Nkandla homestead refurbishments shows no signs of dying down. – Jackie Cameron
Cape Town – Before the end of next year VBS Mutual Bank, which granted President Jacob Zuma a R7.8m loan to pay his Nkandla debt, will soon have a branch in major townships across South Africa.
VBS CEO Andile Ramavhunga said in a radio interview on Power FM987 that the bank’s expansion plans are well underway. It opened a branch in Johannesburg in May this year and now have a corporate office in Rivonia. It is also looking at Pretoria and mainly in Soweto as the next expansion phase.
Relatively unknown, VBS made headline news last week when it came to light that it granted Zuma a loan which enabled him to transfer R7 814 155 to the SA Reserve Bank (Sarb) in terms of a Constitutional Court order handed down at the end of March this year. The president was ordered to pay for non-security items at his private homestead at Nkandla.
According to the Presidency, VBS, mainly based in Limpopo, is one of a few financial institutions offering home loans in respect of land owned by traditional authorities.
Its home loan product in respect of land owned by traditional authorities has been used since 1982, said Ramavhunga.
“In our type of market, you go to a chief and ask for land and the chief gives you the permission to occupy (PTO) a space. Most of our clients are from the area where there is a heavy presence of chiefs and we structure the product along those lines. We created a niche around that market,” Ramavhunga said in the Power FM987 interview.
He added, however, that – due to client confidentiality as at any other bank – he cannot reveal whether Zuma’s loan was in terms of such a PTO or not.
When asked about speculation linking Zuma’s funding by the bank to the Public Investment Corporation (PIC) being a shareholder of the bank, Ramavhunga said the PIC has been a shareholder of the bank since before 1994. The Venda king is also a shareholder.
So Zuma's mortgage loan of R7,8m from VBS Mutual Bank is a large exposure in terms of prudential limits. SARB will be asking questions!
— IG: ConceptSixty5 (@Sentletse) September 12, 2016
“Like any other company, my team and I do all the work, but all the approvals and governance structures of the bank determine whose permission must be sought. We have a board,” he explained.
According to Ramavhunga, the turnaround of VBS Mutual Bank from a loss to a profit is due to a new strategy implemented since he became CEO in 2013/14. Currently the bank’s mortgage loans granted total just under R300m.
“We changed the strategy of the bank to include other products of significance to the SA market – from being only a mortgage lender to a range of services for SMEs – as that is where we saw the need,” he explained. – Fin24