Ithala SOC Limited says it is working with the repayment administrator (RA) appointed by the South African Reserve Bank’s Prudential Authority to produce a plan that will see a new strategic alliance bank partner and sponsoring bank to safeguard deposits and participate in the national payment systems.
Ithala commented on Thursday after an article this week said that the Prudential Authority maintained that Ithala could not take deposits.
According to a Moneyweb report, the SA Reserve Bank said that a high court judgment delivered in December 2023 still stood, and that it confirmed that SARB had not extended the exemption.
SARB said that as a result, Ithala could not continue to be a deposit-taking institution.
In its statement, Ithala said despite the two recent court cases, “the financial institution welcomed the clarification provided by Finance Minister Enoch Godongwana on the role of the RA”.
“The minister said in response to an internal question in Parliament on Wednesday that the appointment of the RA was only to ensure depositors were safeguarded while Ithala considers options to regularise itself.”
Ithala had been operating without a banking licence but has been able to take deposits since the 2000s under an exemption notice, but in December last year, following an announcement in the Government Gazette, this exemption was not extended by the SARB’s Prudential Authority, which is responsible for regulating banks.
On December 21, SARB was given an order by the Gauteng High Court, which appointed Johan Kruger as repayment administrator in Ithala’s payment affairs, stating that Ithala was not entitled to continue any deposit-taking activities and to deal with any deposits already received otherwise than under the direction of Kruger.
Kruger, also in December, brought an in-camera application in the Pietermaritzburg High Court and was granted an order by Judge Robin Mossop that empowered him to recover and take possession of the bank’s assets.
A rule nisi was issued calling upon Ithala to show cause on March 19, 2024, why any assets recovered and which are in the possession of Kruger should not remain in his possession. Ithala subsequently made a reconsideration application, claiming Kruger had failed to place material facts and evidence before the Pietermaritzburg High Court.
Hearing the reconsideration application, acting Judge Immanuel Veerasamy ruled on March 14 that the previous court order granted by Judge Mossop be discharged and struck from the roll.
Ithala said that it had steered a steady ship “for over 20 years since the corporatisation of Ithala, it has been able to meet depositors’ demands”.
“One of the key aspects is that Ithala has never ever dipped into the depositors’ funds to cover its losses.
“Ithala Bank is under the Ithala Development Finance Corporation with assets of R4bn under management which remain profitable. Ithala does not have a liquidity problem.”
The Mercury