Ithala Soc Limited Bank seeks R2. 2 Billion loan to stabilise operations
Ithala Soc Limited Bank presented a strategic roadmap to bring the institution back to normal operations, even considering forming an alliance partnership to borrow R2.2 billion.
Ithala submitted a corporate plan and Medium-Term Expenditure Framework (MTEF) budget for the financial year (FY) 2025/2026 to the KwaZulu-Natal Legislature on Tuesday.
The plan stated that for Ithala to keep its doors open and retain employees the bank needed R30 million per month for what they termed critical expenses which include
- Rentals for head office, branches and ATM site (R3 million)
- Municipal cost for head office and branches (+-R1 million)
- Salaries and Board cost, including third party payments such as, medical aid, pension, PAYE and UIF, etc (R18 million)
- Security and guarding services for head office and branches (R2 million)
In the plan, Ithala stated that it does not have access to any funding and that these costs will need to be funded by the provincial government to ensure the doors remain open.
Also part of Ithala’s key strategic initiatives is to collaborate with the KZN Department of Economic Development, Tourism and Environmental Affairs (EDTEA) and Treasury to secure the R2.2 billion loan guarantee from National Treasury to fund the Loan Book. Ithala intends on transferring the deposit book to the alliance partner at the end of FY 2026 or the beginning of FY 2027
Chairperson of the board, Mpumzi Pupuma said that Ithala has been operating under exemption notice, with the last exemption having expired on 15 December 2023. Pupuma stated that Ithala has not obtained an extension for the exemption nor has its section 12 application for authorisation to establish a bank been assessed by the Prudential Authority (PA).
He said that the Financial Sector Conduct Authority (FSCA) licence remains suspended subject to meeting certain conditions regarding its insurance.
Notwithstanding these developments, Pupuma said that Ithala is also licensed by the National Credit Regulator in good standing and a credible operator regulated by the Financial Intelligence Centre (FIC) as well as compliance with the Public Finance Management Act as regulated by National Treasury also in remarkable record.
Pupuma said the current turnaround strategy seeks to protect and stabilize the operations of the business, following the appointment of the Repayment Administrator (RA) by the PA considering the threat of liquidation since 16 January 2025 and the freezing of Ithala operations, and banking accounts.
Pupuma said without access to operating bank accounts, Ithala is effectively in a frozen state and cannot access its revenue from its revenue streams. This has a direct bearing on the capacity to generate revenue for the foreseeable period until these matters are settled
Given the current external barriers faced by the organisation, there are strategic imperatives which Ithala should overcome to protect and stabilise its operations, recover and rebuild, and invest to rebuild itself.
The four imperatives are:
- Succeeding in securing a strategic Alliance
- Regaining access into National Payment System and to secure Third-Party Payment Provider (TPPP) user status
- Securing Capital both in the interim and in medium to long term towards normalising its future existence.
- Re-submission of an application for authorisation under the Banks Act.
zainul.dawood@inl.co.za