Running of VBS not the Reserve Bank's job - governor

The South African Reserve Bank (SARB) governor Lesetja Kganyago says it was not the central bank's responsibility to run VBS Mutual Bank, which was placed curatorship over alleged fraud.

Kganyago told the bank's annual meeting that they have been criticised for not noticing irregularities earlier, but that the running of  banks is not their responsibility.

"The regulator's role is to protect the depositors of the bank, not the shareholders, and to ensure that the bank adheres to its prescribed prudential requirements," explained Kganyago.

"The governance of the bank is the responsibility of its board, and its operations are in the hands of management."

In April, the central bank commissioned a forensic investigation into possible fraud at VBS Mutual Bank and its executives and shareholders.  

The bank then announced in July that it had secured a guarantee from Treasury for retail deposits of up to R100 000 per depositor.

Nedbank was brought in to facilitate the payments.

Kganyago further explained that as a regulator, the bank relies on statements provided by auditors, who in in turn rely on information supplied by the bank.

These parties he says cannot be held responsible for "if they are misled by fraudulent activities", but need to be accountable if they are complicit.