KZN government, Ithala Bank in a pickle as application removed from court roll

The KwaZulu-Natal government, through the Department of Economic Development and Ithala Bank, have approached President Cyril Ramaphosa in a desperate attempt to save the bank from liquidation.

Earlier this month, the South African Reserve Bank’s (SARB) Prudential Authority (PA) applied to the Pietermaritzburg High Court for the provisional liquidation of Ithala. This after it was found to be “technically and legally insolvent”.

Ithala is a development finance agency owned by the KwaZulu-Natal province. It operated under a banking licence exemption, which expired on 15 December 2023.

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Despite applying for a full banking licence in 2016 and 2023, both applications were declined by the PA.

Ithala heads to court

Following the PA’s application for the provisional liquidation of the bank, the provincial government and Ithala filed an urgent application to counter the process.

The matter was scheduled to be heard in the Pietermaritzburg High Court on Tuesday. However, it was removed from the court roll.

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“On 23 January 2025, the provincial government, through the Department of Economic Development, and Ithala Bank, represented by their legal teams, submitted a request to have the Court preside over an urgent application concerning Ithala Bank,” said KZN premier Thami Ntuli in a media briefing on Tuesday.

“This was initially set for a hearing today on 28 January 2025. We were subsequently informed by the Registrar of the Pietermaritzburg High Court that Justice Ncube is currently on leave and is only scheduled to resume duties on 17 February 2025.

“In response, the department reached out to the Judge President to allocate another judge for the urgent hearing. Yesterday, the Judge President decided to remove the matter from the court roll.

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“A meeting has been scheduled with the senior counsel representing all parties involved tomorrow, Wednesday, 29 January 2025, to discuss the way forward for this case.

“The department’s and Ithala legal teams will be notified by the Registrar once the Judge President makes a further determination regarding this matter.”

Ramaphosa called to intervene

However, the liquidation application is set to be heard on Thursday.

Consequently, Ntuli said the province has escalated the matter to Ramaphosa for intervention as the bank’s liquidation could affect at least 250 000 clients.

“As the Provincial Cabinet, we unanimously resolved to bring this issue to the president’s attention to ensure that the national government is fully engaged.

“I am pleased to report that my discussion with the president was productive and constructive, with a firm commitment to prioritising the Ithala SOC issue.”

Concern and panic

Ntuli said the PA should have provided guidance and support to address Ithala’s compliance concerns instead of filing an application for liquidation.

“The announcement by the Prudential Authority on the alleged insolvency and non-compliance by Ithala has caused widespread concern and panic.

ALSO READ: ANC tasks transformation sub-committee to rescue embattled Ithala Bank

“We wish to state our position that, as provincial government, we are strongly opposed to interrupting Ithala’s activities.”

The provincial government said it would continue to engage all stakeholders to ensure Ithala’s 38 branches remain operational.

“We urge everyone to stand together in solidarity and support our efforts, including those willing to join us in court when this matter gets heard. However, we emphasise that all actions must be conducted within the bounds of the law.”