Deputy Finance Minister David Masondo said Ithala Bank should comply with all directives and regulations that applied to all regulated banks. Picture: Supplied
The National Treasury would not interfere with the work of independent financial regulators in the suspension of the banking licence of KwaZulu-Natal-based Ithala Bank.
Instead, Ithala Bank should comply with all directives and regulations that applied to all regulated banks, said Deputy Finance Minister David Masondo when responding to questions in the National Assembly this week.
The bank had its licence suspended by the Financial Sector Conduct Authority after it failed to meet financial soundness requirements.
The MK Party’s Des van Rooyen enquired about the role the National Treasury was playing to resolve Ithala Bank’s problems.
In his response, Masondo said Finance Minister Enoch Godongwana and the National Treasury’s role as far as regulation of banks was concerned was limited to the formulation of financial regulatory policies.
“As Ithala operates in a regulated environment, it should comply with all directives and regulations that apply to all regulated banks,” he said.
Masondo also said Parliament enacted the Financial Sector Regulation Act of 2017, which reaffirmed the need for financial sector regulation and for the minister not to interfere with regulatory processes in relation to the banking institutions.
“Any interference by the finance minister or other person or body in regulatory activities of independent regulatory institutions will be at variance with the government’s objectives for regulation of the financial sector.”
Masondo said that while Ithala Bank had no banking licence, they had agreed with the KwaZulu-Natal provincial government on the process of licensing Ithala.
“In the meantime, deposits will be housed by a registered bank trading as Ithala. At this stage we cannot disclose the name of the bank because we are negotiating with three banks.”
Van Rooyen said the bank had experienced problems with the appointed administrator as its revenue generation efforts were affected.
He was asked if he supported the termination of the administrator’s services to save Ithala for the benefit of depositors and other stakeholders in KwaZulu-Natal.
Masondo said a solution was being found by working with the provincial government towards a process of ensuring Ithala had a licence.
“We are dealing with the problem together with the Treasury officials. We are serving South Africa, including KwaZulu-Natal.”
Asked by ANC MP Soviet Lekganyane about the strategy to position for sustainable growth and competitiveness, Masondo said the National Treasury could only set conditions for banks to operate competitively.
Asked if the National Treasury would inject capital into the bank to avoid the demise of Ithala like the VBS Mutual Bank, Masondo said they had not reached a point to determine the recapitalisation of Ithala Bank.
ActionSA MP Alan Beesley said he was concerned that Ithala Bank faced imminent collapse following Masondo’s confirmation that neither the KZN government, as the shareholder, nor the National Treasury were planning to inject any capital to ensure Ithala was adequately capitalised.
Cape Times
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