The Inkatha Freedom Party (IFP) has become the latest political party to join the fight to save the historic Ithala Bank from being liquidated by the Prudential Authority (PA), the division of the South African Reserve Bank (SARB) that oversees banks in the country.
Today, February 24, the party organised a march in central Durban and later delivered a memorandum with six demands to the SARB branch in the city centre.
The protest march was led by party President and Cooperative Governance and Traditional Affairs (Cogta) Minister Velenkosini Hlabisa, supported by other top officials like KwaZulu-Natal Premier Thami Ntuli.
Chief among the demands is that the SARB’s PA cease from further action to liquidate Ithala Bank.
“We demand that the Repayment Administrator (RA) cease and desist from their unjust assault on a pro-poor, African bank.”
“We demand that Ithala Bank be granted a banking license so that it is able to become a fully-fledged State Bank,” the IFP said in its written memorandum.
It also demanded that the frozen funds of the bank be unfrozen so that the poor can have access to their hard saved monies.
“We demand protection for the poor who have lost access to their funds,” the party added.
The PA, through Johan Kruger, appointed as the Repayment Administrator (RA) to oversee the operations of the Ithala Bank, decided to halt deposit and withdrawals pending an application before the Pietermaritzburg High Court.
The court recently directed the parties to file their affidavits and exchange other information before a date for an open hearing is set.
In its memorandum, the IFP claimed that it has been informed that Ithala’s assets exceed its liabilities by R400 million and that the bank was deemed a viable concern by the Auditor-General during its last audit.
However, a 429-page long court papers of the PA, which is seeking to liquidate the bank, has dismissed such claims.
In an affidavit filed by the CEO of the PA, Nomfundo Tshazibana before the Pietermaritzburg High Court, she said in October 2024, Ithala Bank was directed to cease taking deposits from customers and repay all the money it holds.
That would have meant that the bank had to pay R2.4 billion to depositors within 14 business days. Instead of complying, the loss-making Ithala Bank came back a month later with its lawyers to say it was going to challenge the directive in court.
The PA claims it issued the directive after learning from internal reports that the bank is insolvent.
The insolvency issue is recorded in a report the CFO of Ithala compiled. In it, the CFO, Mohamed Gafoor, said if the bank was to immediately close down and have to pay all the depositors, it would face a shortfall of R570 million.
That meant that the bank’s liabilities far outstrip its assets, something that is not permitted as it poses a risk to the entire banking system of the country.
