The impending closure of Ithala Bank delivers a severe blow to many black-owned businesses, individuals, and emerging enterprises, Inkatha Freedom Party (IFP) said in a statement on Wednesday.
The IFP’s concerns follow widespread reports in the media indicating that the Prudential Authority (PA) has appointed Mr Johan Kruger to oversee the affairs of the bank, marking the initiation of a process to wind down its deposit-taking functions.
Ithala Bank has grappled for many years to obtain a banking license, with the South African Reserve Bank (SARB) outlining specific requirements for its issuance.
“Unfortunately, due to a lack of political will from government, the bank did not receive the necessary support to meet these requirements and obtain the license.
“In its struggle, the historic bank was compelled to form a partnership with ABSA to access the national payment system. Regrettably, instead of assisting the bank in fulfilling the required criteria, politicians from the ruling party, along with their politically connected associates, treated it as a personal financial resource, leading to its collapse,” the IFP said.
The eThekwini-based financial institution had been criticized by the Financial Services Conduct Authority (FSCA) for not submitting financial reports for two consecutive years.
The regulator then instructed Ithala Bank to address its legal breaches to prevent the potential suspension or withdrawal of its license.
Founded by the late Prince Mangosuthu Buthelezi, the bank’s primary goal was to economically empower black individuals and businesses during a time when the apartheid government marginalised them, according to the IFP.
“This regrettable development highlights the ongoing efforts of government to undermine the positive legacy of Prince Mangosuthu Buthelezi, evident in the closure of institutions like teachers’ colleges and numerous industries in KwaZulu-Natal, depriving thousands of job opportunities.
“The government’s failure to sustain these positive initiatives, reflected in the closure of Ithala Bank and other institutions, is a clear indication of their disregard for the lasting impact and contribution of Prince Mangosuthu Buthelezi’s legacy,” the Party claimed.
Furthermore, the IFP urged Ithala Bank officials to provide clear guidance on the fate of funds invested by its customers. It also suggested that the bank be rescued and transformed into a fully-fledged State bank.
“Currently, the political leaders in KZN seem more preoccupied with their own nefarious agendas, rather than salvaging this historic institution,” it added.