Future of Ithala Bank hangs in the balance amid legal battles

JOHANNESBURG - The future of Ithala Bank remains uncertain, as a tug of war over its license continues. 

The bank is facing an existential crisis, with the matter now in the hands of the court.

The Pietermaritzburg High Court in KwaZulu-Natal (KZN) is yet to rule on a liquidation application made by the Prudential Authority, a division of the Reserve Bank, earlier this year.

Ithala SOC Limited continued to take deposits illegally after its exemption notice expired in December 2023 and the subsequent appointment of a repayment administrator. 

During 2024, the Prudential Authority and the repayment administrator set out on a bid to transfer the deposits held by Ithala to a registered bank. 

But that was hindered by a lack of interest from registered institutions and cooperation by Ithala and the bank was classified as technically and legally insolvent. 

To prevent a run on the bank, the entity’s deposit accounts were frozen to preserve the funds and prevent it from utilising depositors’ funds for other operational purposes.

CEO of the Prudential Authority and Reserve Bank Deputy Governor Fundi Tshazibana said that the matter is still in limbo.

"We await the court decision on what is the date that the matter will be heard.”

KZN's MEC for economic development filed a counter application, opposing the matter.