In what would come as a relief to the embattled Ithala bank, the Minister of Finance Enoch Godongwana has confirmed that he is working on providing the bank with a guarantee to protect the depositors

In a written response, the Ministry said although the minister has not provided a new guarantee to Ithala, he is working on providing it, adding that the minister has communicated the National Treasury’s commitment to ensuring that Ithala’s depositors will not lose their deposits as a result of the liquidation application and the closure of Ithala’s depositor accounts.

“This assurance is consistent with actions previously taken by the National Treasury in relation to bank failures, and subsequent protections provided through the deposit guarantee scheme. As previously done, the Minister of Finance plans to provide a guarantee to facilitate this outcome. There are no further details to be shared about this plan at this stage as the National Treasury is still working on the technical aspects of the guarantee which requires detailed depositor level information,” read the response.

In a court battle between the bank and the South African Reserve Bank’s Prudential Authority (PA) two weeks ago over the access to frozen funds, Ithala Bank accused the PA of continuing with the liquidation process despite a letter of guarantee from the minister which was dismissed by the PA’s attorney Advocate Etienne Theron who stated that a letter was not a guarantee.

Theron said if the minister would give a guarantee tomorrow there would be no reason for liquidation.

The bank had lodged an urgent application to the Pietermaritzburg High Court in a bid to access the frozen funds to pay staff salaries after PA in January suspended all activities on the bank's accounts. The matter was before Judge Muzi Ncube.

The PA had argued that Ithala was legally and technically insolvent which the bank denies. The judgement was reserved.

willem.phungula@inl.co.za