KZN Premier Thami Ntuli calls for backing of Ithala SOC Limited amid banking uncertainties
KZN Premier Thami Ntuli defends Ithala’s solvency, despite Treasury's pending R2 billion guarantee and legal uncertainties surrounding its status.
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KwaZulu-Natal Premier Thami Ntuli has called on provincial departments, municipalities, political parties, and businesses to demonstrate their support for Ithala SOC Limited by banking with the institution, but only once it obtains a full banking license.
In an interview on Face the Nation, Ntuli clarified recent remarks he made encouraging public entities to transact with Ithala.
He stressed that this support must only materialise "when it is fully registered" as a bank under the Banks Act, in line with Section 7.3 of the Municipal Finance Management Act (MFMA), which prohibits municipalities from banking with unregistered institutions.
The Premier’s remarks come after the Pietermaritzburg High Court ruled that Ithala can continue operations while the Prudential Authority’s application to liquidate it is underway. The ruling was seen as a reprieve for the institution, which has long operated under a ministerial exemption rather than a full banking license.
Ntuli said the province is committed to ensuring Ithala becomes fully compliant, but he also believes the institution has been unfairly targeted.
“Unfortunately, the pass of a new act compelled that the issue of any bank has to, in fact, meet some compliant areas of which Ithala has met most of them,” he said.
He also addressed public concern over the safety of deposits in Ithala, stating, “We are giving assurance that the people's money is safe and they will get their money from Ithala. It has an excess of cash of more than R300 million.”
Yet, questions remain about why the bank still requires a guarantee from National Treasury if it is indeed solvent.
When asked, Ntuli acknowledged the complexity: “It is too technical, maybe even for me,when you talk about the guarantee, you talk about something which is much more technical on the side of other aspects of the bank.”
National Treasury had earlier indicated it was working on a R2 billion guarantee for Ithala’s depositors, contingent on a technical process that has yet to be finalised.
Ntuli confirmed the KZN government had engaged Treasury on the guarantee: “We engaged the Treasury so that we, in fact, appealed for the guarantee and we were in agreement, but we've seen a letter suggesting otherwise.”
He emphasised Ithala’s importance to the provincial economy.“This bank has 38 branches which are in rural communities and township communities, when we fail to preserve it, that will mean the people who are living in rural communities and in township, might be deprived of an opportunity of seeing their economy also growing.”
hope.ntanzi@iol.co.za
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