Government and stakeholders unite for Ithala Bank's recovery

The protracted saga surrounding Ithala Bank's future as a KwaZulu-Natal-based financial institution might be advancing towards a potential turning point as various key stakeholders work towards a resolution.

Hopes of Ithala's survival were made known during a media briefing session held at the KZN Premier Thami Ntuli's office in Durban on Monday.

One of the outstanding outcomes delivered at the session was the announcement that Ithala's clientele would soon be able to access their funds that had been frozen for nearly a year.

Ithala was reported to be insolvent in early 2023, resulting in an application from the Prudential Authority (PA) for the institution’s liquidation, a move that threatened to place depositors' investments at risk. Earlier this year, Ithala clients' accounts were frozen.

To fix Ithala and secure its buoyancy, attention must be given to issues inherited from the previous administration that had oversight over the bank, the current provincial government administrators acknowledged.

Finance MEC Francois Rogers reiterated that the complexities the bank found itself immersed in required a collective undertaking together with significant support from the national Minister of Finance. “We have received invaluable assistance, and it has been crucial in navigating these murky waters,” Rogers stated.

The appointment of a repayment administrator by the Prudential Authority has been contentious. The Finance MEC expressed that the government has endeavoured to challenge the PA's handling of the bank's affairs, particularly the decisions that led to the bank’s operational shutdown.

“We have been engaged in ongoing court battles, having successfully won two cases, despite appeals that extend this saga,” he said. Another of the PA's administrative concerns for Rogers was the decision to halt loan repayments via debit orders from Ithala clients, which affected the bank's substantial loan book, valued at R1.9 billion.

“The decision has hampered our ability to collect dues from borrowers, leading to a backlog that needs immediate attention,” Rogers commented.

Despite these challenges, recent developments have sparked hope for the future of Ithala Bank. An agreement reached in a meeting involving provincial and national leadership, including Premier Ntuli and Minister of Finance Enoch Gondongwana, has laid the foundation for potential recovery.

It was confirmed that a R2.2 billion guarantee would augment the bank’s deposit book, prompting the Prudential Authority to step back from its aggressive oversight. Rogers conveyed optimism, stating, “All legal interventions concerning Ithala should now cease, paving the way for a fresh start.”

This decision is expected to provide depositors with the security they have long sought, allowing them to access their funds.

At the same time, Ntuli said the move was aimed at fostering inclusive economic growth, as Ithala stood as a financial institution that supported the province's underserved communities.

The decision to restructure Ithala was motivated by the acknowledgment of longstanding challenges that have plagued the institution, impacting the lives of families and small businesses across the province.

“It is with great relief and positivity that we share this news today,” stated a representative from the KwaZulu-Natal government. “We recognise the hardships faced by our people, families unable to pay rent, school fees, or buy food.

For many, the impact of these challenges has been profound,” he said. A sincere apology was extended to all those affected. “We appreciate the patience, resilience, and faith shown by our depositors throughout this challenging period,” the Premier added.

With the legal and administrative barriers dismantled, depositors are set to access their funds in the coming weeks, prior to Christmas.

Detailed instructions outlining the process for accessing funds, including the branches and service points where services will resume, and the necessary documentation required, are expected to be announced soon.

The government also announced plans to deploy support teams to assist elderly clients and those in remote areas who may lack complete documentation.

Communication regarding this process will be fully accessible, delivered in both isiZulu and English, using various channels including Ithala branches, community radio, and official government platforms.

DAILY NEWS