The Prudential Authority has applied for the provisional liquidation of Ithala SOC Limited, citing its insolvency and failure to meet regulatory conditions. The South African government has assured depositors that their funds will be protected by a government guarantee.
The South Africa n government has stepped in to protect the deposits of Ithala SOC Limited following the Prudential Authority 's move to place the entity under provisional liquidation. The Prudential Authority , responsible for regulating banks and insurance companies within the South Africa n Reserve Bank (SARB), believes this action is in the best interests of Ithala 's approximately 257,000 depositors.
A Repayment Administrator has been appointed to oversee the repayment of deposits, with the Pretoria High Court confirming the appointment in December 2023 and ordering Ithala to cooperate. Despite being commonly referred to as a bank, Ithala never held a banking license. However, the Minister of Finance granted an exemption under the Banks Act, allowing Ithala to receive deposits while it worked towards regularisation. A final exemption notice issued in July 2022 warned that non-compliance would lead to the withdrawal of the exemption. This notice expired on December 15, 2023, as Ithala failed to meet all the conditions. The Prudential Authority emphasizes that Ithala's exemption was always temporary and subject to conditions, requiring either a banking license or the cessation of deposit-taking activities. It further states that Ithala's insolvency, both technically and legally, exposed depositors to potential losses. The liquidation application aims to avoid a bank run and ensure a fair distribution of available funds, acknowledging the inconvenience it may cause.The National Treasury has assured depositors that their funds will be protected by a government guarantee, pending the completion of technical work. This includes providing a guarantee to one or more banking institutions to facilitate the migration of accounts and the timely availability of funds. The Treasury emphasizes its commitment to protecting depositors' interests and ensuring a smooth process, urging them to make alternative banking arrangements while assuring them of efforts to secure their funds. Further details regarding accessing guaranteed funds will be released after the court's decision on the liquidation application
ITHALA South Africa Depositors Prudential Authority Liquidation Government Guarantee Insolvency
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