ITHALA Bank will not go down without a fight as political parties have banded together to say “hands off” the country’s only state-owned financial institution, which they say played a pivotal role in supporting financially marginalised black communities.
The South African Reserve Bank (SARB) has recently filed papers at the Pietermaritzburg High Court seeking an order to place the six-decade-old KwaZulu-Natal bank into provisional liquidation.
It has 38 branches across KwaZulu-Natal with approximately 257 000 account holders and a combined amount of R2.5 billion deposits and total assets of R8.2 billion.
Scores of shocked depositors also called on the government to intervene and pressure SARB’s Prudential Authority (PA) to reconsider its decision, which the IFP described as a “reckless and counter-developmental course of action”.
The party called on the provincial government to urgently prioritise pursuing all avenues to prevent “this attack on the people’s bank”, which its late leader Mangosuthu Buthelezi founded in 1958.
In a statement, party spokesperson Mkhuleko Hlengwa, the transport deputy minister, blamed Johannes Kruger, the head of corporate investigations whom the PA appointed as the bank’s repayment administrator early last year, for the move that might result in its potential demise.
“We demand his (Kruger) immediate removal, especially in light of the court ruling from the last quarter of 2024, which restrains the Repayment Administrator from interfering in Ithala Bank’s daily operations.
“Any move to liquidate Ithala Bank is a direct assault on the financial security of black South Africans,” said Hlengwa.
He said the IFP would respond decisively to what he called provocative action.
“The Prudential Authority is clearly calling us to the streets, and they must rest assured we will answer with an emphatic YES right to their doorstep!” he said.
In search of a solution to the black people’s financial exclusion allegedly by the major commercial banks, some politicians, especially those on the far Left, saw Ithala as the only institution to carry that mandate and called on the SARB to license it.
It was the only financial institution serving communities living under the Ingonyama Trust with affordable home loans.
SARB said on Thursday that the bank was never granted a banking license, but was operating because the finance ministry granted it an exemption to receive deposits.
KwaZulu-Natal EFF chairperson, Mongezi Thwala, said the bank was a necessary tool to rescue black people from financial discrimination.
He said liquidation would be a step back from economic transformation.
“The governor (of the SARB) and the minister of finance should have a pivotal role in ensuring that the first-of-its-kind government-run black bank does not collapse.
“The fact that it was never given a license shows that still today, the white monopoly and captains of industry don’t want us (black people) to have anything that we can celebrate as black people,” he said.
ActionSA MP, Alan Beesley, said the collapse of the bank would mean that another state-owned institution has failed.
“In September last year, ActionSA raised the alarm that, without a capital injection by the KZN Government as the shareholder or by National Treasury, Ithala would not be adequately capitalised, and consequently, its collapse was inevitable,” said Beesley.
He warned that the bank’s attempt to overturn the decision would come to nil as the PA’s application provides “no confidence that anything meaningful can be done to reverse the agency’s collapse, the impact of which, most importantly, falls hardest on its customers, who simply cannot afford to lose their money.
“Sadly, as the agency’s fate is sealed, its demise is evidence of a blatant disregard for past mistakes, leaving the communities that rely on it exposed to significant risk, with their deposits now hanging in the balance,” he said.
However, the KwaZulu-Natal parliament had vowed to put up a fight to save the bank as it believed that there was evidence the bank could still overcome its challenges.
The provincial Economic Development and Tourism Portfolio Committee said the liquidation was undermining Ithala’s developmental role in the province.
He said the committee and finance had formally requested the National Parliament Finance Portfolio Committee and the Prudential Authority to convene an urgent meeting.
“The aim is to reach a resolution that protects the businesses and people of KwaZulu-Natal who rely on Ithala Bank for their financial and developmental needs.
“The Portfolio Committee, as an oversight body, will continue to support the Department of Economic Development and Tourism and Ithala SOC Limited in their legal action to file an urgent interdict against the Prudential Authority’s orders.
“This action is not only necessary but also urgent, as it ensures Ithala can continue its critical mandate of serving the people and businesses of KwaZulu-Natal,” read the committee statement issued by its chairperson, Mafika Mndebele, who is also an ANC provincial spokesperson.
bongani.hans@inl.co.za