Ithala liquidation update: Finance MEC Rodgers says Prudential Authority may withdraw case

There is hope to save Ithala SOC Limited following revelations by the KwaZulu-Natal government that the application to liquidate the entity is likely to be withdrawn.

KZN Finance MEC, Francois Rodgers, said the proposed withdrawal of litigation pertaining to the liquidation of Ithala SOC Ltd follows constructive engagements with the Minister of Finance, Enoch Godongwana, last week.

At the meeting, Rodgers said he had raised serious concerns about the continued litigation against Ithala SOC Ltd regarding the provisional liquidation and the unintended consequences such action could have on KZN’s ability to meet the conditions precedent on the R2.2 billion loan agreement, as assets cannot be ceded while such proceedings are underway.

“I am particularly pleased that logic has prevailed. At every stage, our concern has been the protection of depositors and the avoidance of further harm caused by unnecessary and protracted litigation.”

The MEC further noted that, in his view, Johan Kruger’s pursuit of continued litigation is deemed completely unnecessary and does not advance the interests of depositors or financial stability. Kruger was appointed as a Repayment Administrator at Ithala SOC Ltd by the Prudential Authority of the South African Reserve Bank.

The Prudential Authority had filed papers in the Pietermaritzburg High Court for the provisional liquidation of Ithala.

Rodgers said, “The courts have consistently found that he (Kruger) overstepped his mandate, leading to unnecessary suffering on the part of depositors. It is our considered view that the current legal fees being incurred are tantamount to fruitless and wasteful expenditure, and the Prudential Authority should be held accountable for incurring such unnecessary costs."

KZN Premier Thami Ntuli said this development is a significant breakthrough following months of intensive engagements, complex negotiations, and unwavering efforts by the provincial government to safeguard this historic institution.

“This matter has never been merely about a financial entity; it has always been about protecting the economic aspirations of the people of KwaZulu-Natal, particularly the rural poor, small businesses, and historically marginalised communities who rely on Ithala,” said Ntuli.

The Premier has been at the forefront of engagements to resolve the impasse, working closely with the provincial Cabinet, particularly the MEC for Economic Development, Tourism and Environmental Affairs, Rev Musa Zondi, and MEC for Finance, MEC Rodgers.

Ntuli emphasised that while the possible withdrawal of the liquidation application is a positive and encouraging step, it does not mark the end of the journey. “There is still a substantial amount of work that lies ahead. Our focus now shifts decisively to revitalising and stabilising Ithala so that it can stand firmly on its feet again and operate as a well-oiled, fully compliant, and sustainable financial institution,” he said.

“We remain committed to ensuring that Ithala emerges stronger, more resilient, and properly structured to fulfil its developmental mandate. This institution has played a critical role in extending financial services to communities that were historically excluded from mainstream banking. That legacy must be preserved and strengthened,” Ntuli said.

He said the provincial government will continue to work collaboratively with regulators, National Treasury, and all relevant stakeholders to ensure full compliance with regulatory frameworks while safeguarding the interests of depositors and the broader provincial economy. Ntuli called on the people of KZN to continue placing their trust in the provincial government as it steers Ithala through this critical phase.

“We understand the anxiety and uncertainty that this matter has caused. We assure the people of our province that their government remains fully seized with the task at hand. We ask for continued patience and confidence as we work diligently to secure Ithala’s long-term stability and growth,” he said.

DA MPL and spokesperson on Economic Development, Hannah Lidgett, said that Finance MEC Rodgers had worked hard with the Minister of Finance to save Ithala. “The Premier’s indication that the liquidation of Ithala Bank may be withdrawn is a positive and welcome development.”

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