Ithala Bank, South Africa’s only state-owned financial institution, is at the center of a heated dispute after the South African Reserve Bank (SARB) initiated legal action to place the bank under provisional liquidation.
Political leaders and community members have united to oppose the move, citing the bank’s significant role in supporting financially marginalized black communities.
The six-decade-old institution, headquartered in KwaZulu-Natal, operates 38 branches and serves approximately 257,000 account holders. It holds deposits totaling R2.5 billion and boasts assets of R8.2 billion.
Shocked by SARB’s actions, depositors and political parties have called on the government to intervene. The Inkatha Freedom Party (IFP) labeled the decision reckless, asserting that it undermines economic development and the legacy of the bank’s founder, the late Mangosuthu Buthelezi.
IFP spokesperson and Deputy Minister of Transport, Mkhuleko Hlengwa, criticized the Prudential Authority’s (PA) approach, particularly its appointment of Johannes Kruger as repayment administrator. “We demand his immediate removal,” Hlengwa said, referencing a court ruling from late 2024 that restricted Kruger’s involvement in Ithala’s daily operations.
Hlengwa described the liquidation attempt as an attack on the financial security of black South Africans and vowed decisive action. “The Prudential Authority is daring us to protest, and we will answer that call directly,” he added.
ALSO READ: Limpopo Mother and Son Found Dead in Suspected Domestic Violence Case
Politicians across the spectrum have rallied behind Ithala, emphasizing its role in combating financial exclusion. The bank is widely regarded as a lifeline for communities under the Ingonyama Trust, offering affordable home loans and access to financial services unavailable elsewhere.
SARB noted, however, that Ithala had operated without a formal banking license, relying instead on an exemption granted by the finance ministry.
Mongezi Thwala, KwaZulu-Natal EFF chairperson, highlighted the historical significance of Ithala, calling it a tool for economic transformation. “Its collapse would be a setback for black financial empowerment,” Thwala said, accusing industry monopolies of resisting black-owned institutions.
ActionSA MP Alan Beesley warned that Ithala’s financial troubles were long-standing, pointing to the lack of a capital injection from the KwaZulu-Natal Government or National Treasury. Beesley expressed doubt about efforts to reverse the Prudential Authority’s decision, saying, “The fallout will disproportionately affect depositors who rely on Ithala for their financial security.”
Despite these challenges, the KwaZulu-Natal Provincial Legislature remains committed to defending the bank. Mafika Mndebele, chairperson of the Economic Development and Tourism Portfolio Committee, criticized the liquidation move for undermining Ithala’s developmental mission.
The committee has requested urgent intervention from the National Parliament Finance Portfolio Committee and the Prudential Authority to find a resolution that safeguards the interests of KwaZulu-Natal businesses and communities.
“This legal action is critical to ensuring Ithala can continue fulfilling its mandate of serving the people and businesses of KwaZulu-Natal,” Mndebele stated, emphasizing the urgency of protecting the institution.
