The Ithala Bank crisis is a complex situation involving legal battles, regulatory issues, and significant hardship for both employees and depositors. For years, the bank operated under a temporary exemption that allowed it to take deposits without a full banking license. When this exemption expired in December 2024, the Prudential Authority (PA) deemed the bank insolvent and moved to place it under provisional liquidation. This action led to the freezing of the bank’s accounts, locking out over 257,000 depositors and leaving employees without their August salaries.
The situation has become a litigious affair, with the PA and a court-appointed Repayment Administrator (RA) on one side and Ithala’s management and the KwaZulu-Natal government on the other. While the PA maintains its actions are necessary to protect depositors, Ithala argues that it is solvent and the regulators’ actions are unjustified. The lack of a clear timeline for a resolution has caused immense frustration, prompting unions to seek a political solution to the crisis.
Based on information from various news sources and official statements, here is a timeline of the Ithala Bank crisis:
2022
- July: The Prudential Authority (PA) issues a final exemption notice to Ithala, giving the institution a last chance to get a full banking license or stop taking deposits.
2023
- December 15: Ithala’s exemption to operate without a banking license expires. The PA appoints a Repayment Administrator to recover deposits collected unlawfully after this date.
- December 21: The Gauteng High Court confirms the Repayment Administrator’s authority, banning Ithala from taking further deposits without the administrator’s oversight.
2024
- August: The Financial Sector Conduct Authority (FSCA) suspends Ithala’s license.
- October: The PA directs Ithala to stop taking deposits and to repay existing ones within 14 business days, a directive that Ithala reportedly did not follow.
2025
- January 16: The PA files an application with the Pietermaritzburg High Court for the provisional liquidation of Ithala.
- January 17: The PA announces that it has applied for the provisional liquidation of Ithala. Following this, the bank’s accounts are frozen to prevent a “run on the bank,” which locks out an estimated 257,000 depositors. The National Treasury assures the public that a government guarantee will protect retail depositors’ funds.
- August: The Durban High Court rules that the Ithala board does not have control over its bank accounts, affecting the payment of employee salaries and other operational expenses.
Recent Developments
- The court has allowed Ithala to resume some normal operations, but not deposit-taking. Legal battles continue between the bank and the PA.
- The ANC leadership in KwaZulu-Natal has intervened, and Finance Minister Enoch Godongwana has agreed to guarantee all depositors’ funds to save the bank from liquidation. A turnaround strategy is reportedly in the works.
