Game-changer for Ithala as R2.2bn lifeline comes into play

MONTHS of negotiations between National Treasury of South Africa and the KwaZulu-Natal (KZN) provincial government to save Ithala SOC Ltd appear to be bearing fruit, with a proposed withdrawal of litigation linked to Ithala’s liquidation now in the pipeline.

- SIPHO JACK

This follows ongoing engagements between KZN Finance MEC Francois Rodgers and Finance Minister Enoch Godongwana, resulting in the proposal being announced last week.

The South African Reserve Bank’s Prudential Authority — the regulator for financial institutions — applied for Ithala’s provisional liquidation in December last year after the bank was found to be insolvent and non-compliant.

The move resulted in the freezing of about 250000 depositor accounts, triggering legal and political backlash.

During earlier court proceedings, the Reserve Bank body told the court that the liquidation could be withdrawn if depositors’ funds were secured.

National Treasury has since released a R2.2 billion guarantee to help stabilise the bank — funding that could not be accessed while liquidation proceedings were under way.