Ithala bank fights for survival. Picture: Archive
A TOP economist has cited political interference, mismanagement and the appointment of incompetent individuals to critical leadership positions at Ithala Bank as some of the reasons that led to the woes plaguing the black-owned entity.
Dawie Roodt said: “The politicians are definitely to blame for the demise of the bank. It is definitely mismanagement, the appointment of incompetent people has led to the fall of the bank.”
A leaked document that the Daily News has seen by an individual with intimate knowledge about the crisis at the bank revealed that there was a plot, allegedly hatched by powerful individuals, including prominent politicians and businesspeople, to deliberately collapse the black-owned Ithala Bank for their ulterior motives.
The bank was formed in 1958 and has 38 branches in KwaZulu-Natal. The KZN government fully owns the bank.
However, accusations of collusion and looming liquidation cast a dark shadow over its future.
This view has been explicitly echoed by the MEC for Economic Development, Tourism, and Environmental Affairs, Reverend Musa Zondi, who has stated in several interviews that there was a deliberate attempt to collapse the long-established Ithala Bank.
Zondi alleged that the big commercial banks were among the people bent on collapsing the Ithala bank.
The Congress of the South African Trade Unions (Cosatu), also shared the same view.
“Without a doubt, we believe, as Cosatu, that this thing runs deep. It is clear that the people who want to see this crucial bank collapse. We see this as an economic battle fuelled by the international imperialist forces,” said Edwin Mkhize, the provincial secretary of Cosatu in KZN.
Mkhize said the ultimate goal for the people behind the crisis at Ithala Bank was to plunge the poor people into poverty.
“This move is aimed, among others, at keeping the status quo the same. That is the only reason they want to shut down the bank. If there is corruption in the bank, deal with corruption, and if there’s maladministration, deal with that instead of completely shutting the bank that services the poor, who are majority black people,” said Mkhize.
The bank’s operations were abruptly halted after the Prudential Authority’s (PA) application to the High Court in Pietermaritzburg for Ithala’s provisional liquidation was made last week, due to alleged non-compliance.
The matter was set down for Friday.
Ithala has repeatedly accused the PA’s Johan Kruger, the repayment administrator (RA) appointed by the South African Reserve Bank (SARB), of arrogance.
Ithala and the provincial government are opposing the matter. The MEC for Finance and provincial leader of the DA, Francois Rodgers, confirmed this yesterday.
“We are still committed to finding a solution regarding Ithala and its future. These are ongoing discussions. As far as the legal action taking place, we will certainly be joining the province in opposing the action that has been taken (against Ithala),” said Rodgers.
The lives of 257,000 depositors are in limbo following the court action against Ithala.
The Public Servants Association’s provincial manager, Mlungisi Ndlovu, said: “Ithala has suffered from long-standing governance failures, weak internal controls, and financial mismanagement. The lack of a competent and accountable leadership structure has further exacerbated the problem,” said Ndlovu.
While commonly referred to as a bank, it is worth noting that Ithala has never been granted a permanent banking licence. Operating under a temporary exemption from the Banks Act, the institution has struggled for decades to secure a permanent licence after its previous one expired in December 2023.
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