MEC for Economic Development, Tourism and Environmental Affairs, Reverend Musa Zondi said external threats, in the form of banking interests and politics, were behind the challenges faced by Ithala bank. Picture: Doctor Ngcobo/Independent Newspapers
KwaZulu-Natal Economic Development, Tourism and Environmental Affairs (Edtea) MEC Reverend Musa Zondi said external threats, in the form of banking interests and politics, were behind the challenges faced by Ithala bank.
Zondi was speaking to media on Tuesday in Ballito, north of Durban where he said the mainstream banks in the country would like to benefit from Ithala’s clients. He said that he was also concerned that national government policies could have an impact on the regional bank.
“The Mercury” reported that Ithala SOC Ltd, a financial institution established by the government to mobilise financial resources and provide supportive services, particularly in rural areas, is at a crossroads following the suspension of its Financial Service Provider (FSP) licence by the Financial Sector Conduct Authority (FSCA).
Zondi said that Ithala is probably the last surviving black African bank.
“There are rumours and a cause for concern that the big four banks want to squeeze Ithala, small as it is and get hold of the clientele. This happened to many other small banks that have been victimised like this before.”
Zondi added that he is concerned that the national government could also impact the future of Ithala.
“Government wants everything to be done from a national level. We know that since 1994, the government has been talking about establishing a state bank and it hasn’t happened.
They have tried the same thing by strengthening the Post Bank but we can see the current situation there.
“We feel that regulatory activities that affect all banks are managed from the national government and their policies squeeze smaller banks like Ithala out of existence. It might have been unintended but it is something we need to focus on.”
Zondi said that he has already taken the matter to KZN Premier Thami Ntuli.
“The premier has already been informed about the situation regarding Ithala Bank. The matter was also taken to the cabinet of KZN. They discussed the matter and realised it is complicated.
“The premier is in Cape Town on another matter with the National Council of Provinces and he will meet with the Minister of Finance (Enoch Godongwana) this week to discuss the concerns.”
Zondi earlier this week had called for Ntuli to discuss the matter with President Cyril Ramaphosa but on Tuesday said that Ramaphosa would be out of the country and a meeting had instead been scheduled with Godongwana.
Presidency spokesperson Vincent Magwenya on Tuesday said that the matter is between the regulator and the bank’s authorities.
“There’s no legal provision for the president to intervene in any manner or form. However, for the sake of depositors and economic activity in the province, the president hopes that the issues impacting the bank’s operations are resolved expeditiously.”
The South African Reserve Bank on Tuesday said it would not comment on institutions they regulate.
Zululand University-based political analyst Professor Sipho Seepe said Ithala caters for poor mainly black people and could possibly face external threats.
“In South Africa there are not many banks that are seen to be pro-black or servicing mainly black people, Ithala was and is filling that gap. The collapse of Ithala is not because of financial difficulties but because it was not supported enough, even by the government.”
Legal expert Mpumelelo Zikalala said that Ithala bank can take the matter to court after they have exhausted all options.
“The FSCA, which is the regulator, suspended Ithala’s FSP licence but they can appeal the matter to the FCSA on the grounds that they have complied with all requirements.
“If that fails they can approach the courts where they can say that they are providing a service to poor and impoverished black people and need to have their licence. It is something they can argue and have a case for.”
The Mercury
