Ithala Bank is in a protracted legal battle with the South African Reserve Bank’s Prudential Authority (PA) which has filed papers for the bank's provisional liquidation .
Image: DOCTOR NGCOBO/Independent Newspapers
Finance Minister Enoch Godondwana has committed to guarantee Ithala bank.
Image: GCIS
THE clients of Ithala Bank are anxiously awaiting Finance Minister Enoch Godongwana’s finalisation of the resolution that he is working on that guarantees protection of their deposits with the entity.
The 257000 Ithala Bank clients have been unable to access their funds due to an ongoing liquidation application by the South African Reserve Bank's (SARB) Prudential Authority (PA), which is a court matter.
Among the many clients caught in the uncertainty are Nomusa Ngcobo, a 55-year-old resident of Pietermaritzburg, and Bhekinkosi Gumede, 56, from Isipingo.
Both have been struggling to make ends meet since the liquidity crisis began.
"I've had savings in Ithala for years, and now I can't access my money. It's been tough," said Ngcobo, whose small business in Pietermaritzburg relies heavily on access to those funds.
"I’ve tried everything, called the bank, and went to the branch, but there's nothing they can do. It feels like we’re just stuck in the middle, and no one is listening to us."
Gumede, a father of three, echoed similar frustrations. "I don’t know how long we can keep waiting like this. I have bills to pay, and school fees for children, and I can’t access anything. This has greatly affected my life," he said.
"The government needs to do more because we’re the ones suffering while they argue in court."
Gumede urged the Finance Ministry to speed up the guarantee process so that he could access his savings.
“I worked so hard for my money. Now to be treated like this. The people who want to liquidate Ithala must allow us to withdraw our money first,” he said.
In a written response, the Ministry of Finance confirmed that, although no new guarantee was yet to be provided to Ithala, they were actively working on a solution.
The ministry stressed that the National Treasury remains committed to ensuring that Ithala’s depositors will not lose their funds due to the liquidation process or the closure of the bank's depositor accounts.
“The assurance is consistent with actions previously taken by the National Treasury in relation to bank failures, and subsequent protections provided through the deposit guarantee scheme,” read the response.
“As previously done, the Minister of Finance plans to provide a guarantee to facilitate this outcome. However, there are no further details available at this time as the National Treasury is still working on the technical aspects, which require detailed depositor-level information.”
This news has provided some hope, but the delay continues to weigh heavily on clients like Ngcobo and Gumede.
In a recent court battle between Ithala Bank and the Prudential Authority, the bank accused the PA of continuing with the liquidation process despite a letter of guarantee from the minister, which the PA’s attorney, Advocate Etienne Theron, dismissed. Theron argued that the letter was not a formal guarantee, and if the minister were to provide one, the liquidation would no longer be necessary.
The bank lodged an urgent application with the Pietermaritzburg High Court to access the frozen funds and pay outstanding salaries to staff. In January, the PA suspended all activities on the Ithala's accounts. The bank refuted the PA's claims of insolvency. The liquidation matter is before Judge Muzi Ncube.
For clients like Ngcobo and Gumede, the legal wrangling was burdensome.
"I don’t understand why they can’t just return our money back,” Nomusa said. We need to survive."
Gumede said, “The future feels uncertain right now, but we hope that someone will step in and finally fix this situation.”
As Ithala continues its fight for survival, it has enjoyed backing fromvarious political parties, including the IFP, uMkhonto weSizwe Party (MKP), and the DA.
Labour unions such as the Congress of the South African Trade Unions (Cosatu) have also thrown their weight behind the bank, which was formed in 1958. The late IFP founder and long-time Prince Mangosuthu Buthelezi was instrumental in the formation of the bank.
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