Labour Court hearing Ithala liquidation application
The provisional liquidation application by the Reserve Bank's Prudential Authority against Ithala Bank was heard in the Pietermaritzburg High Court, sitting in the Durban Labour Court, on Monday.
In January, the Prudential Authority suspended all activities on Ithala's accounts.
This was over findings that Ithala was legally and technically insolvent.
The authority’s move follows the expiration of Ithala’s exemption in December 2023, which allowed it to operate without a banking licence.
This left the state-owned entity unable to operate, staff salaries unpaid, and 25,000 depositors unable to access their monies.
READ: KZN govt applies for R2.4bn loan for Ithala depositors
Ithala wants the court to permit it to continue operating as normal.
Earlier this month, the KZN Treasury requested an R2.4 billion loan from the National Treasury to secure Ithala's deposit book until it acquires its banking licence.
KZN Finance MEC Francios Rodgers attended the court proceedings in support of Ithala.
He said if the Treasury has secured every rand belonging to the depositors, he does not see why the court should not rule in favour of Ithala on Monday.
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"From a Treasury perspective, we have now secured an R2 billion loan to protect all the depositor’s money. We hope to get an outcome that will be in the best interests of those depositors with Ithala Bank," said Rodgers.
"What the Prudential Authority could then do, what the court could then do, is appoint a curator to ensure that the running of the operation is taken over. And that a legal entity is found to handle the depositor's money while Ithala tries to legalise itself as a commercial bank."
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