More than R1.7 billion has been repaid to Ithala’s depositors, bringing the National Treasury-backed repayment programme closer to completion.
With the bulk of depositor repayments now complete, the KwaZulu-Natal Treasury says stakeholders are working to conclude the remaining legal and contractual arrangements underpinning the repayment framework. The province says further collaboration is required to reach what it describes as the “final transaction” by 30 June.
The update follows a high-level meeting in Pretoria on 19 June attended by KwaZulu-Natal Finance MEC Francois Rodgers, KwaZulu-Natal Treasury head Carol Coetzee, Finance Minister Enoch Godongwana, South African Reserve Bank Deputy Governor Fundi Tshazibana, and Financial Sector Conduct Authority Commissioner Unathi Kamlana.
The meeting brought together the key public sector institutions involved in Ithala’s repayment programme and the remaining legal arrangements underpinning the National Treasury-backed repayment framework.
According to the KZN Treasury, discussions focused on resolving the remaining legal and contractual issues delaying the finalisation of the repayment arrangements, including the settlement of the government guarantee.
At the meeting, it was agreed that the Prudential Authority (PA) would “review” the role of repayment administrator (RA) Johan Kruger.
The SARB subsequently clarified the nature and scope of that assessment, emphasising that it relates to the implementation of the repayment administrator’s mandate.
Rodgers told Moonstone the repayment administrator currently retains control over Ithala’s bank accounts, which hold more than R1bn in cash and cash equivalents.
“These funds, together with a portion of the loan book, are intended to contribute towards the repayment of the R2bn secured by KwaZulu-Natal Treasury from National Treasury. It has always been our understanding that the RA was appointed to safeguard and protect depositors’ funds,” he said.
The repayment programme followed the PA’s January 2025 application to liquidate Ithala, which resulted in approximately 257 000 depositor accounts being frozen. National Treasury subsequently agreed to make the funds available to facilitate repayments.
The government guarantee allowed depositors to begin accessing their money through FirstRand Bank in December 2025 while Ithala’s longer-term future continued to be worked through in the courts and by regulators.
Rather than acting as a permanent bailout, the guarantee was designed as a bridge arrangement: depositors could be paid immediately, while Ithala’s cash reserves and part of its loan book would ultimately be used to reimburse National Treasury.
This week, Rodgers said the province remained focused on ensuring that all legitimate depositors receive their money while maintaining appropriate governance and accountability.
A media statement issued on Tuesday also reiterated that the existing agreement between National Treasury and FirstRand gives depositors three years to claim their funds.
“However, the Government of Provincial Unity continues to encourage clients to visit their nearest First National Bank (FNB) branch with the required documentation, as it works towards concluding the process sooner. All claims are subject to stringent verification processes,” the statement read.
A role under review
The KZN Treasury statement says the PA will review Kruger’s role, “given the back-to-back agreements constructed by Provincial Treasury”. It added that the review is necessary to enable the provincial government to meet its contractual obligations under its agreement with National Treasury.
However, the SARB has clarified that the PA is “assessing the practical implementation of the repayment administrator’s existing mandate in light of the ongoing National Treasury-backed repayment of Ithala depositors”. It said this “does not constitute a review of the RA’s statutory powers or the underlying regulatory framework”.
Kruger’s role has been one of the most contested aspects of the Ithala saga almost from the day he was appointed.
Although often referred to as a bank, Ithala never held a banking licence. It accepted deposits under an exemption issued in terms of the Banks Act. The final exemption, issued in July 2022, required Ithala to obtain authorisation to establish a bank by 30 June 2023 and to address a range of regulatory concerns.
It failed to do so, and when the exemption lapsed on 15 December 2023, the PA appointed Kruger as repayment administrator to safeguard depositor funds and oversee the repayment process.
Ithala repeatedly challenged both his authority and the scope of his powers. When the PA launched liquidation proceedings in January 2025, the entity accused Kruger of acting “arrogantly and callously” and argued that his directives had unnecessarily prevented customers from accessing their money.
The dispute over the repayment administrator’s powers has since run alongside the separate liquidation proceedings. Although the PA withdrew its liquidation application in March this year after the National Treasury-backed repayment framework was put in place, the litigation concerning Kruger’s powers continues.
The repayment administrator’s powers remain the subject of pending proceedings before the Supreme Court of Appeal (SCA). The appeal stems from a November 2024 High Court judgment that limited the scope of those powers. Until the appeal is decided, Ithala’s deposit-taking activities and the repayment of deposits continue to be governed by the existing court orders and the National Treasury-backed repayment framework.
The SARB said the RA’s statutory powers are prescribed by section 84 of the Banks Act and “cannot be amended through an administrative or operational process”.
It also said that, irrespective of any refinements to how the RA’s mandate is implemented in practice, depositor protection will continue to be upheld in accordance with the provisions of the Banks Act, and the repayment process will proceed uninterrupted.
The central bank further said that any such refinements remain separate from, and do not affect, the ongoing litigation before the SCA.
“The appeal concerning the scope of the RA’s powers is still pending, and the current legal position remains subject to the outcome of that process. A hearing date for this appeal has not yet been set,” the SARB said.
