Ithala Bank rescue talks reach critical stage as Treasury awaits full loan-book disclosure

The fate of more than 270 000 Ithala depositors hangs in the balance as negotiations for a long-awaited rescue plan edge forward but remain mired in bureaucracy and political oversight. Government officials insist progress is being made, yet the R2.2 billion Treasury guarantee meant to unlock depositors’ funds is still frozen behind layers of conditions and caution.

At the centre of the standoff is Ithala’s loan book, a set of records so sensitive that it has become the gatekeeper of relief. Treasury has refused to release the funds until it gains full access to the loan files and receives a comprehensive repayment plan. Insiders say the hesitation is not merely procedural; it stems from concerns that the loan book could expose questionable lending to politically connected individuals.

KwaZulu-Natal’s provincial leaders have intensified their lobbying. Finance MEC Francois Rodgers, Premier Thami Ntuli and Economic Development MEC Musa Zondi have met directly with President Cyril Ramaphosa and Finance Minister Enoch Godongwana to push for urgent resolution. Rodgers confirmed that the province is finalising documentation to meet Treasury’s conditions and negotiating with another registered bank to act as a temporary custodian for depositors’ funds while Ithala remains under suspension.

Before its collapse, Ithala managed deposits worth roughly R2.47 billion. Its downfall began in January when the exemption allowing it to operate outside the Banks Act expired, prompting the Prudential Authority to apply for liquidation over non-compliance. The authority then appointed Johannes Kruger as repayment administrator, a move Ithala has since challenged in court, setting off a legal tug-of-war that further delayed depositor access.

Adding complexity, around ten percent of Ithala’s loans were issued to staff members, an unusually high share by global standards. Many of these loans remain unpaid, with incomplete records complicating recovery efforts. For the bank’s 400 employees, uncertainty has become routine. Salaries have been delayed, and the National Education, Health and Allied Workers’ Union is preparing legal action over ongoing wage disruptions.

For depositors, frustration has hardened into despair. In Estcourt, a group of them gathered outside Ithala’s offices, holding handwritten signs demanding answers. “We don’t know who to believe anymore,” one woman said, her voice tired but resolute. “Every week it’s promises and meetings, but we still can’t touch our money.”

In September, Premier Ntuli announced a R300 million provincial rescue fund to cover Ithala’s staff salaries, leases and statutory obligations, a temporary measure to keep the institution afloat. Call lines have since been reopened, but only to provide limited updates.

Meanwhile, President Ramaphosa has authorised the Special Investigating Unit to probe suspected irregularities at the Ithala Development Finance Corporation, focusing on procurement and governance lapses, as well as loans granted to influential figures.

Treasury spokesperson Mfuneko Toyana maintains that depositor protection remains a priority, but emphasises that Ithala’s status as an exempt financial institution, rather than a licensed bank, demands a customised approach. Once the guarantee is released and a partner bank appointed, depositors will finally regain access to their funds, either through the new intermediary or by transferring to another licensed bank.

For now, hope is tempered by fatigue. The negotiations may be in an “advanced stage,” but thousands of depositors still wake each morning to the same question: when will their money return? The answer, for now, remains buried somewhere between policy papers and political caution.