Latest news with #IthalaBank
The Citizen
20-05-2025
- Business
- The Citizen
Court backs Ithala, but customers say ‘Nothing has changed'
Ithala Bank users remain in limbo despite a recent High Court ruling in favour of Ithala SOC Limited. Customers say little has changed on the ground as they cannot access their funds or resume normal business operations. The Pietermaritzburg High Court ruling, handed down on May 9, interdicted the South African Reserve Bank's appointed repayment administrator, Johannes Kruger, from interfering in the operational management of Ithala. The ruling confirmed that the Ithala board retains full operational authority and that Ithala may carry out all legally permissible transactions, excluding deposit-taking. ABSA Bank was also interdicted from blocking transactions related to salaries and operational expenses. However, for many Ithala clients, the judgment has yet to translate into practical relief. Groutville farmer Zodwa Mthembu said she was devastated to find that she still could not access her accounts even days after the court ruling. 'I went to the Ithala branch in Stanger, and they told me they haven't received the go-ahead to process withdrawals,' said Mthembu. Mthembu, who operates several small businesses through her Ithala accounts, said the shutdown has dealt her a triple blow. 'Since the bank closed shop in January, I've had to survive on personal loans to keep things going. I, too, need rescuing,' she said. Hydroponic farmer and Vella Villa Project founder Mhlengi Ngcobo echoed her concerns, saying that while the legal victory is welcome, the financial damage done over the past few months has been severe. 'We're still in crisis mode. The road to recovery is going to be long and hard. Many of us are small-scale farmers who rely on every cent,' said Ngcobo. Mthembu and Ngcobo are among the 257 000 Ithala depositors left in limbo after the provincial state-owned bank ceased operations in January, after failing to meet banking regulations and financial stability requirements. At least five other farms across iLembe are also affected. Despite operating under special exemptions from the South African Reserve Bank, Ithala never obtained a banking licence and primarily served KwaZulu-Natal residents. A repayment administrator was appointed to manage withdrawals, but legal battles have caused delays, leaving depositors uncertain about how much they will recover and when. KwaZulu-Natal Finance MEC Francois Rodger reiterated his commitment to ensuring the institution is not only protected but restored to full functionality. 'Ithala serves a niche market of mainly rural residents. Attempts to systematically shut it down are short-sighted and demonstrate a total disregard for rural livelihoods,' he said. Rodgers said the Government of Provincial Unity (GPU) will continue engaging with legal counsel to enforce the ruling and support affected communities. Stay in the loop with The North Coast Courier on Facebook, X, Instagram & YouTube for the latest news. Mobile users can join our WhatsApp Broadcast Service here or if you're on desktop, scan the QR code below. At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
The Citizen
12-05-2025
- Business
- The Citizen
Prudential Authority to appeal ruling on Ithala Bank liquidation
The KZN government has voiced its support for Ithala. The Prudential Authority has suffered a legal setback in its efforts to liquidate Ithala Bank. The regulatory body, tasked with overseeing South African banks, initiated provisional liquidation proceedings against Ithala earlier this year, prompting the freezing of the state-owned bank's accounts. However, the KwaZulu-Natal (KZN) High Court in Pietermaritzburg delivered a ruling last week allowing Ithala to fully resume its operations. The institution, which falls under the South African Reserve Bank (Sarb), has since confirmed its intention to appeal the ruling. Prudential Authority to appeal Ithala Bank judgment Repayment administrator Johan Kruger is also set to challenge the judgment through an appeal. 'It is important to note that the RA has, in any event, complied with the court's prior order not to take control of Ithala's non-deposit-taking operations. 'However, the RA has been unable to isolate depositor funds from other funds as Ithala has never maintained a separation between its deposit-taking activities and its other business operations,' the institution's statement reads. ALSO READ: KZN Treasury unhappy with Godongwana's R2bn guarantee to Ithala depositors The Prudential Authority further clarified that the court's judgment pertains only to Kruger's role and does not affect the broader liquidation application, which remains pending before the same court. 'The PA awaits the finalisation of the liquidation application.' The authority emphasised that its primary responsibility is to protect the interests of Ithala's depositors. 'In this context, while the PA understands the frustration and difficulty this situation may cause for depositors, the freezing of accounts remains a necessary and prudent step to safeguard the depositors' remaining funds. 'This measure aims to ensure a fair and lawful distribution process of depositor funds while awaiting the outcome of the liquidation application.' KZN government backs Ithala, criticises Prudential Authority KZN Premier Thamsanqa Ntuli had welcomed the judgment, calling on depositors not to panic or engage in a 'run on the bank'. 'As the KwaZulu-Natal provincial government, we wish to place it on record that we strongly oppose any attempts to interrupt the activities and operations of Ithala Bank. 'We believe the claims made by the Prudential Authority are unfounded and appear to form part of a broader agenda to undermine one of the few financial institutions historically designed to serve marginalised communities in KwaZulu-Natal,' Ntuli said in a statement. READ MORE: KZN Treasury at loggerheads with Sarb over Ithala Ithala liquidation The Prudential Authority is seeking Ithala's liquidation on the basis that the bank has been accepting deposits unlawfully. The repayment administrator had declared the institution both technically and legally insolvent. Ithala had historically operated as a bank through several exemption notices issued under the Banks Act, despite never having been granted a formal banking licence. The Financial Sector Conduct Authority (FSCA) suspended Ithala's licence in August 2024 due to concerns over the institution's liquidity. The bank's liquidation could affect at least 257 000 clients. NOW READ: Ramaphosa authorises SIU to investigate Ithala and its employees
IOL News
27-04-2025
- Business
- IOL News
Unpacking the R2. 2 billion guarantee dispute surrounding Ithala Bank
Ithala Bank is in a protracted legal battle with the South African Reserve Bank's Prudential Authority (PA) which has filed papers for the bank's provisional liquidation . A dispute has ensued over theR2.2billion guarantee needed for IthalaBank, with the National Treasury (NT)warning that its primary task is to protectcustomers and not to bail out the Treasury described its stance asa standard approach it has applied insimilar situations to safeguard customersof other embattled financial institutions. This statement follows revelations that the KwaZulu-Natal provincial govern-ment has approached the Treasury to enquire about the guarantee. Senior management of Ithala recentlyinformed members of the provinciallegislature that, despite negotiations with the Treasury over the guarantee, it resolved to give the guarantee to the SA Reserve Bank instead of the province. The Mercury understands that opinions differ on what the guarantee is for and how it should be utilised. The province believed it could find a commercial bank to take over the deposits of Ithala, and the guarantee was to help facilitate that process and guarantee that commercial bank, as it would have been taking over a liability. Ithala Bank, owned by the provincial government, is facing liquidation following an application brought by the Prudential Authority via a Repayment Administrator (RA). Its functions have been taken over by the RA. Dr Thulani Vilakazi, the Group CEO of Ithala Bank, recently briefed the finance portfolio committee about a letter from the Ministry of Finance indicating that the bank's liquidation must proceed. This letter was a communiqué from the Treasury to the Reserve Bank. During the recent briefing, Vilakazi revealed that Treasury had addressed critical matters in a letter, including the guarantee sought by the province, which would have allowed customers access to their accounts. Ithala Bank customers have not had access to their accounts for months. 'We had an engagement with the premier two weeks ago, and we learned that the minister of Finance had issued a guarantee of approximately R2.2bn;however, the guarantee is not in favour of the province but rather the Reserve Bank. In our interpretation of the communiqué issued by the minister, it is clear that the (letter recommends) that liquidation process must go ahead. They must liquidate our assets and pay out the depositors,' said Vilakazi. KZN Finance Minister Francois Rodgers expressed awareness of the changing stance and noted that the guarantee now goes through the Reserve Bank.'As Treasury, we are not happy. The national ministry has continually changed the goalposts. Every day that passes, the people who have money with Ithala are the victims. 'Initially, the province proposed that the guarantee be given to the province in the form of a loan to secure the deposits in Ithala Bank, with Ithala and the province responsible for the interest on that loan. This arrangement would have allowed the commercial bank and Ithala to work together to ensure that depositors have access to their funds,'said Rodgers. He said the court case to liquidate the bank should proceed, adding that they were not fearful of the process, as 'the bank's assets exceed its liabilities, which means that the bank cannot be liquidated'. KZN Premier Thami Ntuli said the letter was directed to the Reserve Bank,and it was better placed to comment on its contents. However, he indicated thatthere were aspects that unsettled theprovince.'We are in the process of writing tothe minister asking for clarity on someof the things that we saw in that letter.' The Treasury said: 'The framework under which the National Treasury pro-vides financial support to reduce the harm being suffered by ordinary depos-itors at Ithala as a consequence of the liquidation application is defined in pastpractice and formalised in law.'The National Treasury has applieda consistent approach to providingresources to depositors affected byfinancial sustainability issues faced by adeposit-taking financial institution. This action required that financial support beprovided to the depositors and not theshareholder.' The National Treasury said this approach was consistent with the cov-erage afforded under the Deposit Insur-ance Scheme and support provided to the depositors of Habib Bank, African Bank, Ubank and VBS. In each case, the legal responsibility of the minister relates to acting in the interest of depositors. The Treasury made it clear that the action being taken was only in relation to depositors and not a bailout of the provincially owned entity. 'Ithala is owned by the KwaZulu-Natal Provincial Government, making it the financial responsibility of the KZN Provincial Government regarding any guarantees and/or financial injections. "National Treasury focus is on ensuring that customers do not lose their hard-earned deposits and are not forced to go even longer without access to their funds,' it said. THE MERCURY
