The KwaZulu-Natal government has requested a R2.4 billion loan from national treasury as a security guarantee to secure Ithala SOC Limited’s deposit book until the entity acquires a banking license.
In a statement the KZN Treasury says Ithala’s 257 000 depositors haven’t been able to withdraw or deposit funds after an instruction by the Repayment Administrator, or RA, since January.
This after the RA, on behalf of the Prudential Authority of the South African Reserve Bank, applied to provisionally liquidate Ithala over claims of legal and technical insolvency.
Ithala, backed by the provincial treasury, has disputed this and said its assets exceeded its liabilities by R316 million.
The provincial Treasury says the loan is not to fund the pay-out of depositors but to secure the deposit book while it’s in the process of securing an interim banking partner, and while the entity applies for its own banking license.
