The KwaZulu-Natal legislature's economic development and tourism portfolio committee has expressed its support for Ithala Bank in its legal bid to prevent liquidation.
On Friday the committee said it had noted the Prudential Authority’s application for the provisional liquidation of Ithala. The bank falls under the economic development, tourism and environmental affairs department.
The committee said it had engaged “extensively” with the department and Ithala during meetings in October and November to “find sustainable solutions to protect Ithala from liquidation”.
“During these engagements it became evident that plans and initiatives are under way to strengthen Ithala’s operations and address challenges. The Prudential Authority’s decision to pursue liquidation undermines these efforts and the broader developmental role Ithala plays in the province.”
The committee said the legislature, through a joint resolution by the committee and the finance committee, had formally requested the national parliamentary finance portfolio committee and the Prudential Authority to convene an urgent meeting.
“The aim is to reach a resolution that protects the businesses and people of KwaZulu-Natal who rely on Ithala Bank for their financial and developmental needs,” it said.
“The committee, as an oversight body, will continue to support the department of economic development and tourism and Ithala in their legal action to file an urgent interdict against the Prudential Authority’s orders.”
The Prudential Authority — which is responsible for the prudential regulation of banks and insurance companies, within the administration of the South African Reserve Bank — said it believed its action was in the best interests of the about 257,000 depositors of Ithala, as the appointed liquidator will be able to use insolvency legislation to recover and distribute their funds to the extent that it is possible.
Business Day reported Ithala has been in and out of court with the Prudential Authority in recent years as the regulator sought to have the entity regularise its affairs. Though not a bank, the newspaper said Ithala takes deposits due to an exemption granted by the Prudential Authority. Ithala has until recently been operating with a banking licence exemption, which is renewable every 12-24 months. The most recent exemption lapsed in December after Ithala failed to meet conditions laid out by the authority. The regulator raised concerns about Ithala’s high cost structure relative to its nature, size, complexity and risk profile.
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KwaZulu-Natal legislature backs Ithala Bank in legal battle to block liquidation
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The KwaZulu-Natal legislature's economic development and tourism portfolio committee has expressed its support for Ithala Bank in its legal bid to prevent liquidation.
On Friday the committee said it had noted the Prudential Authority’s application for the provisional liquidation of Ithala. The bank falls under the economic development, tourism and environmental affairs department.
The committee said it had engaged “extensively” with the department and Ithala during meetings in October and November to “find sustainable solutions to protect Ithala from liquidation”.
“During these engagements it became evident that plans and initiatives are under way to strengthen Ithala’s operations and address challenges. The Prudential Authority’s decision to pursue liquidation undermines these efforts and the broader developmental role Ithala plays in the province.”
The committee said the legislature, through a joint resolution by the committee and the finance committee, had formally requested the national parliamentary finance portfolio committee and the Prudential Authority to convene an urgent meeting.
“The aim is to reach a resolution that protects the businesses and people of KwaZulu-Natal who rely on Ithala Bank for their financial and developmental needs,” it said.
“The committee, as an oversight body, will continue to support the department of economic development and tourism and Ithala in their legal action to file an urgent interdict against the Prudential Authority’s orders.”
The Prudential Authority — which is responsible for the prudential regulation of banks and insurance companies, within the administration of the South African Reserve Bank — said it believed its action was in the best interests of the about 257,000 depositors of Ithala, as the appointed liquidator will be able to use insolvency legislation to recover and distribute their funds to the extent that it is possible.
Business Day reported Ithala has been in and out of court with the Prudential Authority in recent years as the regulator sought to have the entity regularise its affairs. Though not a bank, the newspaper said Ithala takes deposits due to an exemption granted by the Prudential Authority. Ithala has until recently been operating with a banking licence exemption, which is renewable every 12-24 months. The most recent exemption lapsed in December after Ithala failed to meet conditions laid out by the authority. The regulator raised concerns about Ithala’s high cost structure relative to its nature, size, complexity and risk profile.
TimesLIVE
MORE:
Prudential Authority applies to place Ithala under liquidation
National Treasury snubs parliament, slowing pace on Ithala Bank recovery
Zulu king says suspension of Ithala's banking licence will ‘devastate’ thousands
Ithala Bank warns of operational dead end if licence or exemption not granted
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