Relief for Ithala Bank Depositors: National Treasury Releases R2.2 Billion Guarantee for Pre-Christmas Payouts
In a major breakthrough for thousands of frustrated customers, the KwaZulu-Natal government has confirmed that Ithala Bank depositors will soon regain access to their hard-earned money. The announcement comes after the National Treasury finally approved a R2.2 billion guarantee, ending a painful saga that has left savings frozen for nearly two years. This move not only halts the bank’s liquidation process but also promises full repayments before the festive season, bringing much-needed relief to families, small businesses, and community groups across the province.
The development highlights the ongoing challenges in South Africa’s financial sector, where regulatory hurdles and insolvency issues can disrupt lives on a massive scale. With over 250,000 depositors affected, the crisis has sparked widespread calls for better oversight of state-owned financial institutions. As the province looks ahead, this guarantee could pave the way for Ithala’s revival as a key player in economic development.
The Historic Announcement in Durban
On Monday, 1 December 2025, KwaZulu-Natal Premier Thamsanqa Ntuli held a media briefing in Durban to share the good news. Joined by Finance MEC Francois Rodgers, Ntuli declared that all necessary agreements have been finalised to start repaying Ithala SOC Limited depositors. He described the moment as a “historic breakthrough,” emphasising that it clears the last legal and administrative hurdles.
“Ladies and gentlemen of the media, I am pleased to announce that we have reached a historic breakthrough. We have successfully concluded all agreements required to begin the repayment of Ithala SOC Limited depositors. This milestone removes the final legal and administrative barriers and ensures that depositors will begin accessing their funds before Christmas,” said Ntuli.
The premier went on to apologise sincerely to everyone impacted, including depositors, businesses, and communities. “It is deeply regrettable that this period disrupted families, small businesses and livelihoods. On behalf of the provincial government, we sincerely apologise to every person affected,” he added. Ntuli called the resolution a “victory for the people of KZN,” crediting strong negotiations with the National Treasury and the Presidency.
Detailed instructions on how to access funds will be released soon, including which branches will be activated and what documents are needed. Special teams will assist elderly depositors and those in remote areas to make the process smoother.
Background of the Ithala Bank Crisis
The troubles at Ithala Bank trace back to 2022, when the Prudential Authority (PA) under the South African Reserve Bank decided not to renew the bank’s annual exemption. This exemption had allowed Ithala to function like a commercial bank without a full banking licence for over a decade. The final exemption, issued on 12 July 2022, expired on 15 December 2023, making any further deposit-taking illegal from 16 December 2023.
Without the licence, the bank could no longer operate legally, leading to frozen accounts in 2023. No one could withdraw or deposit money, leaving more than 250,000 customers—including small businesses, investors, and community stokvels—in financial limbo. In January 2025, the PA escalated matters by applying for the bank’s provisional liquidation, citing technical insolvency. An independent solvency report confirmed that Ithala was “hopelessly insolvent,” with insufficient cash to repay depositors despite years of taxpayer support from the KwaZulu-Natal Treasury.
The PA appointed a repayment administrator (RA) under section 84 of the Banks Act to protect assets and manage payouts. To prevent a chaotic run on the bank and ensure fair distribution, the RA halted all withdrawals from deposit accounts and payments from related bank accounts. The provincial executive council strongly opposed the Reserve Bank’s view that Ithala could not operate independently, leading to prolonged legal battles.
Ithala, established in 1958 as the KwaZulu Finance Corporation and later restructured, has deep roots in the province. It focuses on developmental finance, supporting rural areas, entrepreneurs, and underserved communities often ignored by mainstream banks. However, repeated violations of exemption conditions, including failure to secure a proper banking licence, led to its downfall. Historical losses required ongoing injections from the provincial treasury, highlighting systemic issues in managing state-owned entities.
Financial Details and the Role of the Guarantee
At the time of its insolvency declaration, Ithala held R1 billion in cash, R1.9 billion in its loan book, and R3.5 billion in total assets. Despite these holdings, the bank admitted it could not repay depositors without external help. The R2.2 billion guarantee from the National Treasury addresses this shortfall, covering depositor debts and allowing the liquidation process to stop.
The Minister of Finance had earlier signalled that such a guarantee would be issued to ease the hardship on depositors. Under the deal, the national government backs the deposits, but Ithala still cannot resume full operations like taking new deposits until it obtains a banking licence. This guarantee ensures that funds are protected and distributed fairly, preventing further economic strain in the province.
The provincial government has also set aside R300 million to support the bank during this transition, showing a commitment to its long-term stability. This financial lifeline comes amid broader concerns about unemployment and economic inequality in KwaZulu-Natal, where institutions like Ithala play a vital role in fostering inclusive growth.
Official Statements and Commitments
Premier Ntuli stressed Ithala’s importance beyond mere banking. “He described the bank as more than just a financial institution. It stands as one of the province’s most important pillars of developmental finance and a symbol of our commitment to inclusive economic growth,” he said. He highlighted its essential role in backing small businesses and communities that mainstream finance often overlooks.
Finance MEC Francois Rodgers echoed these sentiments, noting the bank’s assets and the need for careful management moving forward. The executive has reaffirmed its dedication to saving Ithala, with formal processes involving the provincial government, the bank, the National Treasury, and the appointed payment administrator set to roll out soon.
Ntuli promised that the government would work to prevent such disruptions in the future, ensuring stronger safeguards for depositors. The announcement has been met with relief, though some depositors remain cautious until they see the money in their accounts.
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