The Congress of South African Trade Unions (COSATU) in KwaZulu Natal said in a statement on Monday that it is deeply distressed about the impending liquidation of KZN-based Ithala Bank Edwin Mkhize, COSATU Provincial Secretary said that labour giant concerned about potential closure of Ithala Bank.File Picture : Zanele Zulu, independent Media
The Congress of South African Trade Unions (COSATU) in KwaZulu Natal said in a statement on Monday that it is deeply distressed about the impending liquidation of KZN-based Ithala Bank
Edwin Mkhize, COSATU Provincial Secretary, said that the South African Reserve Bank’s Prudential Authority has applied to the High Court in Pietermaritzburg for the provisional liquidation of Ithala, after the development finance agency was reported to be insolvent. “Ithala does not have a banking licence but has been allowed to act as one and accept deposits under a temporary exemption granted by the Prudential Authority, with the hope that in time it would comply with all stipulated conditions and eventually be granted a licence.”
Mkhize added that after renewing the exemption several times, the Prudential Authority is now pulling the plug on Ithala. “COSATU is first and foremost worried about the over 400 workers who may lose their jobs if Ithala is forced to close its doors forever. With South Africa’s unemployment rate at a shocking 41.9%, it is clear we cannot afford to send another 400 people to the unemployment line.”
Mkhize said that we must do everything in our power to hold on to every job to avoid the devastating impact the job losses will have on the economy, as well as the workers and their families. “The Federation is also concerned about the impact the closure of Ithala will have on its more than quarter of a million depositors, who are themselves workers and grant recipients.”
Mkhize added that they note National Treasury’s assurance that it will guarantee the funds of the 257,000 depositors. “The guarantee offers little comfort, however, when in the same breath, the depositors from working-class and poor communities are told to make urgent alternative banking arrangements.”
Mkhize said that it is critical that whatever happens, social grant recipients be assisted to access their grants and workers be enabled to receive their monies and wages. “In an economy that mainly remains untransformed more than 30 years into the democratic breakthrough, Ithala represented what could be possible if the working class and poor were allowed to access even the smallest slice of the economy for themselves.”
Mkhize added that COSATU echoes its Affiliate, the National Education, Health and Allied Workers Union (NEHAWU), that Ithala banked the rural unbanked, financed bonded houses throughout the KZN province, banked churches, stokvels, SMMEs, informal businesses, and the taxi industry. “It is no secret that these groupings are not considered triple A clients by traditional banks; but at Ithala, they found refuge.
For the longest time, there’s been talk of establishing a state-owned bank. “Ithala’s sole shareholder is the KZN Provincial government – therefore it is a state-owned bank. Granted, to date it has not been perfectly managed; the Reserve Bank should view Ithala as a kind of pilot and draw lessons on what not to do, and by extension what to do to build a successful state bank. Closure must be a call of last resort when all other interventions have failed.”
Mkhize said that much has also been said about the development agency’s inability to draw skilled expertise into its employ. “COSATU challenges the government to prove its willingness to transform South Africa’s economy by seconding the necessary skills to Ithala, drawing up a turnaround plan, exploring means to capitalise it, and resuscitating it. The idea that everything meant to empower the country’s historically excluded must be condemned has to be dealt a fatal blow. COSATU calls on the Prudential Authority to exhaust all possible options to resolve this crisis.”
Mkhize added that the Federation calls on the Reserve Bank and all its divisions to take their regulatory role very seriously. “Ithala could have been set on the right path much earlier if the bank had been stringently following its own regulations and not allowed the situation to deteriorate to the verge of ruin. It is equally important that any person found to have broken the law be held fully accountable.”
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