Latest news with #PrudentialAuthority
IOL News
13-05-2025
- Business
- IOL News
Prudential Authority appeals ruling allowing Ithala bank to resume operations
The Prudential Authority (PA) has announced that it has launched an application for leave to appeal the 9 May 2025 ruling by the Pietermaritzburg High Court Image: File The Prudential Authority (PA) has launched an application for leave to appeal the May 9, 2025 ruling by the Pietermaritzburg High Court regarding Ithala SOC Limited (Ithala). Judge Muzi Ncube's ruling last week allowed the embattled state-owned bank to resume operations, while also stating that Johannes Kruger, the Repayment Administrator appointed by the Prudential Authority (PA), had no legal right to assume control of the bank's daily operations. KwaZulu-Natal Premier Thami Ntuli welcomed the High Court's decision, noting that the ruling would bring relief to the thousands of clients, employees, and suppliers who have been unable to receive payments due to the current Administrator's halt on all transactions. "We urge the public to stand in solidarity with us as we fight to preserve an institution that represents economic dignity, inclusion, and empowerment for millions," Ntuli said. In a statement released on Monday, the Prudential Authority confirmed it had filed for leave to appeal the ruling, and the Repayment Administrator also intends to challenge the judgment. "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 SOC Limited's (Ithala) 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 statement read. The Prudential Authority further clarified that this judgment is separate from the ongoing liquidation application, which is still pending before the same court. The PA is awaiting the finalisation of the liquidation application. "The PA's primary mandate is to protect 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." [email protected] IOL Business Get your news on the go, click here to join the IOL News WhatsApp channel.
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
News24
09-05-2025
- Business
- News24
Reserve Bank clarifies actions taken against Ithala
The SA Reserve Bank would like to clarify actions taken against Ithala due to concern about incorrect and misleading information that has surfaced in some media coverage. For more financial news, go to the News24 Business homepage. The South African Reserve Bank (SARB) has received several media queries relating to the Prudential Authority's (PA) decision to apply for the liquidation of Ithala SOC Limited (Ithala). In addition to the media queries, the SARB has noted, with concern, several instances of misleading and/or incorrect information surfacing in the media, which warrants the clarifications below. SARB is not able to respond to some of the queries as the matters are before the courts. Further context on the liquidation proceedings against Ithala can be accessed on the SARB's on its website. 1. If Ithala was never a registered bank, why was it allowed to take deposits? Even though Ithala has never been registered as a bank, it had been permitted to operate the business of a bank (which included accepting deposits from the general public) through various exemptions, which were originally issues by the Registrar of Banks together with the Minister of Finance. Subsequently, these exemptions were issued by the PA (the successor to the Registrar of Banks). All exemptions expressly required Ithala to separate its deposit-taking activities from its other businesses, such as its business as a credit provider advancing loans to the public, which Ithala did not do. 2. Have all Ithala's bank accounts been frozen? No. The Repayment Administrator (RA), which was appointed by the PA, has instructed Absa Bank Limited (Absa) to freeze only those accounts related to Ithala's deposit-taking business. As a result, from 16 January 2025, Ithala could no longer receive deposits into its deposit-taking accounts, nor could it make payments from those accounts. This also affected depositors. This action was taken to protect depositors by preventing a run on the entity – a situation where large numbers of depositors try to withdraw their funds at once, potentially causing the institution to collapse. Freezing the accounts and instituting a liquidation process allows for an orderly and fair repayment to all affected depositors. Note: Absa acted as the intermediary bank, as Ithala is not a licensed bank. 3. Has the RA/PA acted contrary to Judge Ncube's order delivered in the Pietermaritzburg High Court? No. The PA and RA have not acted contrary to Judge Ncube's order delivered in the Pietermaritzburg High Court. In the judgment, it was confirmed that the RA was entitled to take control of Ithala's deposit-taking activities and that Ithala was not permitted to accept deposits from the public. The RA has applied for leave to appeal the judgment to the extent that it prevents him from taking control of all of Ithala's assets. The RA deems this necessary because Ithala did not separate its deposit-taking activities from its other businesses, such as its business as a credit provider advancing loans to the public. While an application for leave to appeal automatically suspends the operation of the judgment, the RA has nevertheless taken all necessary steps to comply with Judge Ncube's order. In this regard, the RA has only frozen accounts related to Ithala's unlawful deposit-taking, in line with the judgment. 4. Has the RA lied about Ithala's solvency and liquidity in order to place it in liquidation? No. The RA commissioned independent forensic accountants to assess Ithala's solvency and liquidity. Their report found that Ithala is technically insolvent, meaning its liabilities exceed its assets. Specifically, Ithala's liabilities amount to R2.79 billion, while its total assets stand at R2.35 billion, resulting in a shortfall of R441.63 million. This insolvency report has been submitted to the court as part of the liquidation proceedings and is now a matter of public record. The PA had previously reported that, between 31 March 2008 and 31 March 2024, Ithala incurred losses totalling R520 million. The institution has, over time, operated with a high-cost structure that is misaligned with its size, complexity and risk profile. 5. When will the outcome of the liquidation application be communicated? The PA and RA are currently awaiting communication from the court regarding the outcome of the liquidation application. 6. Was it the RA's decision to apply to court for Ithala to be liquidated? No. The RA does not act independently of the PA. The PA appointed the RA in terms of section 84 of the Banks Act 94 of 1990 (Banks Act), which defines the powers and duties of the RA. The RA executes his mandate under the direction of the PA. At no stage has the RA taken any steps in relation to Ithala without the express consent of the PA. The application for the liquidation of Ithala was instituted by the PA, as it is entitled to do in terms of the Banks Act. The PA is therefore the only applicant in the liquidation application. The RA is, in fact, a respondent in the application. The ultimate purpose of the RA's appointment is to safeguard Ithala's assets and repay its depositors. 7. Has the RA or PA unlawfully transferred Ithala's client database to another commercial bank? No. The RA, following the PA's instruction, has engaged with certain registered banks, with the aim of appointing a Repayment Bank. This will enable the repayment of deposits owed to Ithala clients, which were unlawfully taken by the bank. This is a necessary step in terms of the Banks Act. 8. Are the loans by Ithala customers no longer payable? Ithala's clients remain liable for all loans they have taken out. The PA's actions in relation to Ithala do not extend to its loan business. However, the PA is aware that Ithala has sent SMS notifications to all clients informing them that loan repayments must now be made to an alternative Ithala account.
The Citizen
09-05-2025
- Business
- The Citizen
Sarb clarifies ‘misinformation' about Ithala liquidation
Provides answers to frequently asked questions. The Prudential Authority is awaiting the court's decision on the liquidation application for Ithala. Picture: File The South African Reserve Bank (Sarb) has issued a media release to set the record straight on what it calls 'misinformation' circulating about Ithala. In January this year, the Prudential Authority, a division of the Sarb responsible for supervising banks and financial institutions, announced that it had filed for the provisional liquidation of Ithala at the Pietermaritzburg High Court. The Prudential Authority and the appointed repayment administrator are awaiting the court's decision on the liquidation application. Meanwhile, the Sarb provides answers to some frequently asked questions. If Ithala was never a registered bank, why was it allowed to take deposits? Although Ithala was never registered as a bank, it was allowed to operate as one through exemptions issued by the Registrar of Banks, which later became the Prudential Authority. These exemptions required Ithala to separate its deposit-taking activities from its other businesses, such as providing loans. Ithala failed to do so. ALSO READ: KZN Treasury unhappy with Godongwana's R2bn guarantee to Ithala depositors Have all Ithala's bank accounts been frozen? No. The repayment administrator, appointed by the Prudential Authority, instructed Absa Bank Limited to freeze only Ithala's deposit-taking accounts. From 16 January 2025, Ithala could no longer receive deposits or make payments from these accounts, affecting depositors. This action was taken to prevent a run on Ithala (a situation where a large number of depositors try to withdraw their funds at once, potentially causing a collapse) and ensure an orderly and fair repayment to all depositors. (Absa acted as the intermediary bank since Ithala is not a licensed bank.) Has the repayment administrator and/or the Prudential Authority acted contrary to Judge Ncube's order delivered in the Pietermaritzburg High Court? No. In the judgment, it was confirmed that the repayment administrator was allowed to take control of Ithala's deposit-taking activities. It was also confirmed that Ithala was not permitted to accept deposits from the public. The repayment administrator has requested permission to appeal the judgment to the extent that it stops him from taking control of all of Ithala's assets. The repayment administrator deems this necessary because Ithala did not separate its deposit-taking activities from its other businesses, like giving loans to the public. Even though applying for an appeal pauses the judgment, the repayment administrator is still complying with Judge Ncube's order. He has only frozen accounts related to Ithala's illegal deposit-taking, which is in line with the judgment. ALSO READ: Treasury to 'protect' 257 000 clients affected by Ithala liquidation Has the repayment administrator lied about Ithala's solvency and liquidity in order to place it into liquidation? No. The repayment administrator tasked independent forensic accountants to assess Ithala's solvency and liquidity. Their report found that Ithala is technically insolvent, meaning its liabilities exceed its assets. Specifically, Ithala's liabilities amount to R2.79 billion, while its total assets stand at R2.35 billion, resulting in a shortfall of R441.63 million. This insolvency report, now a public record, was submitted to the court for liquidation proceedings. Between 31 March 2008 and 31 March 2024, Ithala incurred R520 million in losses due to a high-cost structure misaligned with its size, complexity, and risk profile. No, the repayment administrator operates under the direction of the Prudential Authority and does not act independently. All actions taken by the repayment administrator have been with the consent of the Prudential Authority. The liquidation application was brought by the Prudential Authority. The purpose of the repayment administrator is to safeguard Ithala's assets and see to it that the depositors are repaid. ALSO READ: ANC tasks transformation sub-committee to rescue embattled Ithala Bank Has Ithala's client database been unlawfully transferred to another commercial bank? No. Following the Prudential Authority's instructions, the repayment administrator has engaged with registered banks to appoint a repayment bank, enabling the repayment of unlawfully taken deposits owed to Ithala clients. This step is required by the Banks Act. Are Ithala clients still required to repay their loans? Ithala's clients are still responsible for repaying their loans. The Prudential Authority's actions regarding Ithala do not cover its loan business. However, Ithala has notified all clients via SMS that loan repayments must now be made to a different Ithala account. This article was republished from Moneyweb. Read the original here.
News24
08-05-2025
- Business
- News24
Prudential Authority accuses Ithala of blocking access to records
Ithala 'bank' faces an existential threat. A court order was issued in December 2023 for the Prudential Authority's repayment administrator to access the state-owned entity's banking system. A leaked email, court documents, and dramatic interactions between the repayment administrator and Ithala have exposed allegations of hacking, alleged conflicting interests, and counter-allegations of blocking access to the SOE's systems, using antiquated banking systems, etc. Claims of hacking, the alleged conflict of interest of the repayment administrator, and the blocking of access to Ithala's banking records are some of the dramatic allegations made in a legal dispute between the South African Reserve Bank-administered Prudential Authority (PA) and Ithala's senior management and lawyers. The allegations are laid bare in the PA's court application filed at the North Gauteng High Court in Pretoria, as well as a leaked email exclusively seen by News24. After the PA's court application to provisionally liquidate the state-owned entity (SOE), the PA requested a court order to force the SOE to comply with a previous order that ruled Ithala should give the PA's repayment administrator (RA), Johannes Kruger, access to its banking systems so that depositors could be repaid. However, Ithala lawyers refuse to 'hold the hand of the repayment administrator to access Ithala's banking system', according to an internal email by Malatji and Co Attorneys managing director Tebogo Malatji. Ithala is also lobbying the provincial government to oppose the PA's attempts to allegedly hand over the SOE's 22 000 clients' confidential information to a financial services competitor. The emails show that lawyers refuse to hand over the SOE's data as they believe Ithala complied with the court order. The lawyers' email claims the RA had 'imaged the entire server' on 21 January 2025 and, therefore, had 'full access of the data' sought. The email came just days before Ithala filed responding papers in the Gauteng High Court in Pretoria on 6 May. The administrative standoff also exposes a political fight between National Treasury and the KwaZulu-Natal government leaders about the future of Ithala. The PA's banking insurance supervision head, Kerwin Martin, in his founding affidavit deposed on 24 April, accuses the SOE of withholding information relating to its banking systems and, therefore, ignoring a court order. According to court documents, in July 2024, and on Kruger's instruction, his attorneys of record, Bowman Gilfillan – where Kruger is an executive director – sent a letter to Ithala's legal representatives, Malatji & Co Attorneys, requesting 'unhindered access' to Ithala's banking system, in line with a previously issued consent order. According to Martin, Kruger and his team had previously been provided with 'some reports' from Ithala's banking system after the KwaZulu-Natal High Court in Pietermaritzburg issued an initial order in December 2023. 'I am advised by the RA (Kruger) that these reports... were incomplete and (are now) outdated. 'The RA needs access to Ithala's banking system to obtain the most recent banking reports in order to perform his functions in accordance with his statutory appointment,' Martin said in his affidavit. Malatji, in July 2024, wrote to Kruger's attorneys at Bowmans, requesting an explanation of why Kruger wants 'super administrator access' more than six months after the offer was made to access some reports relating to Ithala's banking system, and to what use this access would be put. Martin's affidavit recalls a dramatic standoff where, on 2 October 2024, an IT company representing Kruger in an attempt to extract information from the banking system was barred from gleaning the information. He said representatives of the IT company, Cyanre, were given a laptop, logged on and granted access to the SOE's bank application. 'One of Ithala's employees, [senior business analyst Sanjay] Ramdeyal, joined Mr Labuschagne and Mr Griffin [of Cyanre], ostensibly to assist them in retrieving the relevant documentation [and to extract the required reports].' But Ramdeyal refused to do so, 'saying he wasn't allowed to share the required information'. Martin said Ramdeyal told the Cyanre officials they had been granted access to the banking application and 'therefore needed to extract the reports themselves'. Subsequently, Ithala, in emails between the RA and the SOE representatives, accused Kruger of using one of the Cyanre representatives to hack into its systems – an allegation Martin's affidavit denies. In November, Malatji wrote an email to Werkmans, representing Kruger, recalling an earlier meeting where an agreement was reached about how Kruger's office 'will only be granted limited access to the system. In line with our previous advice to the RA (Kruger), this limited access is necessitated by various factors'. These include, among others: Confidentiality issues which may lead to a contravention of the Protection of Personal Information Act, No. 4 of 2013. The agreement aiming to protect the integrity of the data or information in Ithala SOC's banking system and the confidentiality thereof. Requirements for a certain level of expertise in accessing the system and extracting reports therefrom. But Martin said Werkmans denied such an agreement had been made and said the RA's office was told in no uncertain terms they wouldn't have access to the record. 'Ithala's turn in its position was presumably due to pressure it had received from Ithala's ultimate shareholder, the provincial government,' Martin said in the affidavit. Ithala has been asked to file its opposing affidavit by 21 May 2025, with the hearing set for 12 June 2025 in Pretoria. The South African Reserve Bank was approached for comment but a spokesperson said the matter was sub judice and therefore won't comment. Meanwhile, the leaked email from Malatji reveals Ithala's likely response. 'Curiously, we can now see in para 80 of the affidavit and annexure 24, which is presumably an email from FNB, what transaction has the PA and the RA lined up for the anointed so-called repayment bank, which is, by all accounts, FNB. 'A term sheet is being negotiated for FNB to receive Ithala's records of depositors' details including the balance due to them, [as well as] cash from Ithala's bank accounts and a guarantee from National Treasury which will enable FNB to open accounts for the depositors, who will be approached for either repayment of deposits or continuation of a client/banker relationship. 'Ithala can clearly not aid and abet the unlawful transfer of its deposit book to another bank with no benefit for Ithala and its shareholder,' Malatji said in the email circulated in the legal company. READ | 'Make Ithala rise again': NCOP seeks ways to keep the development finance agency open He viewed the cooperation sought by Kruger as motivated by an 'ulterior purpose' and meant 'to facilitate an unlawful transaction of transferring Ithala's deposits to a repayment bank'. 'They are not paying for the resources and assistance they seek,' Malatji said in the email. An FNB spokesperson confirmed that in February 2025, the National Treasury requested the bank to support Ithala's South African Social Security Agency (Sassa) customers with bank accounts in light of the bank's liquidation process. In responding to queries on FNB 'recruiting' Ithala clients, FNB CEO Harry Kellan said: 'It would have been easier for us to decline the request from National Treasury. 'Opening thousands of accounts on short notice is not an easy task. But in keeping with our core value of providing help whenever and wherever we felt we had to step up and assist. 'Sassa beneficiaries are the most vulnerable members of our society, and we wanted to ensure they were not left stranded.' The KwaZulu-Natal government holds a dim view of Kruger's alleged conflict of interest as he is both the RA and a partner at Bowmans. The Special Investigating Unit previously confirmed it's investigating a R34 million tender issued to Tech Mahindra, which is represented by Bowmans, where Kruger is a director. KwaZulu-Natal Finance MEC Francois Rodgers is against what he views as Kruger's attempts to shut Ithala's operations.
