Ithala’s legal bid to overcome liquidation
THE Pietermaritzburg High Court is set to witness a high-stakes legal battle, beginning on Friday, as Ithala Bank prepares to face the Prudential Authority (PA) over claims of alleged insolvency and non-compliance.
With the support of the KwaZulu-Natal provincial government, led by Premier Thamsanqa Ntuli, the black-owned Ithala Bank is rallying to protect its legacy while navigating the turbulent waters of regulatory scrutiny, which could lead to its liquidation.
The conflict began with what has been considered the PA’s controversial move to seek Ithala’s provisional liquidation, citing non-compliance with financial regulations, a claim vehemently contested by the bank.
In response, Ithala filed an urgent interdict challenging the PA’s directives, which included halting operations that allow for deposits and withdrawals.
However, the court denied the interdict, directing all parties to await the forthcoming hearing.
Further complicating matters, was the Financial Sector Conduct Authority (FSCA) suspending Ithala's licence as a financial services provider, effective from July 26, 2024. This suspension was based on allegations that the bank's liabilities exceeded its assets over recent financial years. Despite this, Ithala maintains that it remains solvent and capable of fulfilling its obligations, bolstered by claims of a clean audit report for the year ending March 2024 from the Auditor-General.
MEC for Finance Francois Rodgers declared that the Democratic Alliance (DA) would support Ithala Bank and the provincial government in opposing the matter.
The provincial government led by Premier Ntuli approached Finance Minister Enoch Godongwana, seeking a temporary solution that would enable the transfer of deposits to another financial institution.
This initiative hinges on the condition that deposits could be reinstated should Ithala regain its license.
MEC for Economic Development, Tourism and Environmental Affairs (Edtea) Musa Zondo echoed the bank’s assertions of solvency, urging stakeholders to consider Ithala’s significant social and economic contributions since its establishment in 1958.
However, the PA remains steadfast in its claims, citing Ithala’s losses, including a staggering R520 million from 2008 to 2024, as indicative of the bank’s precarious financial state.
Stakeholders on both sides of the argument await the outcome of the court proceedings, the ruling could have lasting implications not only for Ithala Bank but also for the financial landscape in KwaZulu-Natal and beyond.
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DAILY NEWS
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