Ithala Bank's future uncertain despite ANC's claims of victory

The future of Ithala Bank still remains unclear as KwaZulu-Natal Premier Thami Ntuli says he was unaware of the developments announced by the ANC that it has successfully engaged with Finance Minister Enoch Godongwana, who agreed to save the bank from liquidation. 

Provincial Economic Development, Tourism and Environmental Affairs Portfolio Committee Mafika Mndebele also expressed uncertainty about the bank's survival as it remained unclear whether it would be granted an exemption to continue operating. 

The ANC created a sense of relief after its announcement that it had engaged with Godongwana, who agreed to intervene and save the bank from being wiped off through liquidation. 

However, Ntuli told the media in an interview this week that his office was not aware of the positive developments announced by the ANC. 

Ntuli and the ANC were among many who were concerned about the South African Reserve Bank (SARB)’s Prudential Authority (PA) suspending the operation of the bank and freezing depositors’ money pending the final liquidation court order. 

“One is not aware of the new developments except that we are in court with both the PA and Repayment Authority (RA), as you will recall that Judge Mncube of the High Court KZN issued a judgment saying the PA and RA have no authority in the affairs of Ithala. 

“They (PA and RA) appealed, and we are looking forward to the Supreme Court of Appeal, and in July, we will be in the Pietermaritzburg High Court again in the liquidation matter. That is the only information we know,” said Ntuli. 

He said the provincial government was continuing to engage President Cyril Ramaphosa and Godongwana. 

“We have done everything to ensure that the PA and RA’s hands are off Ithala. 

“We are not aware, therefore, of the development; however, we continue to engage for the interest of the depositors and the institution,” said Ntuli.

Godongwana had previously announced that he had made R2 billion available to protect the interests of depositors whose savings would be wiped out by the liquidation. 

“As the custodian of depositors, I have taken a view that I should protect particularly those who have made savings between R100,000 and lower, and I have made available an amount of about R2 billion to ensure that whatever happens, their savings are protected,” said previously to the media. 

The ANC provincial convener, Jeff Radebe, told the media last week that he and the party’s provincial coordinator, Michael Mabuyakhulu, engaged with Godongwana and reached an agreement that the bank will not be liquidated and the minister would fully guarantee all depositors.

“Our intervention was firmly aligned with the ANC’s developmental agenda and our responsibility to protect institutions that uplift the people. 

“We are pleased to report that, following these engagements, a breakthrough was reached: Ithala Bank will not be liquidated,” said Radebe in a statement. 

Mndebele said Mabuyakhulu briefed him about at least three engagements between the ANC and Godongwana. 

“He (Mabuyakhulu) has reported that there will be money set aside for depositors to be guaranteed about their money. 

“But as things stand, whether that would save Ithala from liquidation or not is another debate because, besides the issue of guarantors, there are other things that have been key in putting Ithala in the situation that it is in right now,” said Mndebele.

He said the committee understood that the main issue was that Ithala be granted a banking licence “because without a banking licence, it cannot be a bank right now”.

“While applying for the banking licence, Ithala must be given an exemption by the minister so that it could be able to operate.

“The RA and PA must then withdraw the case for liquidation because the case is still on. 

“Engagement with the minister is necessary as the minister can play a key role in addressing these challenges,” he said. 

Mndebele said Mabuyakhulu promised to have another engagement with him “so that we will do everything we can to deal with the matter”.

He said he would not rush to brief the provincial Parliament about what Mabuyakhulu told him until Godongwana makes a public announcement. 

He said the portfolio committee should be briefed by the Economic Development, Tourism and Environmental Affairs Department if there are any developments on the matter, “because we play an oversight role over the department”. 

“During our interaction with the department, the department furnished me with a report, which, when I look at it, suggests that Ithala is still in court fighting against its liquidation,” said Mndebele.   

Following the ANC’s announcement, Cosatu expressed relief that the move, which the ANC announced, will save more than 400 jobs that were on the brink of being wiped off.

“It is critical that the Prudential Authority, Treasury, and the KZN provincial government work together to strengthen governance and internal controls, enhance compliance with banking regulations, and launch a turnaround strategy focused on accountability, transparency, and performance,” said the federation’s national spokesperson, Zanele Sabela.

“The federation was also concerned about the impact the closure would have on Ithala’s more than 257,000 depositors, who were workers and grant recipients,” said Sabela.

bongani.hans@inl.co.za