Over R1 billion paid out to state-owned ‘bank’ customers

FNB has paid out over R1 billion to Ithala customers around a month after the process began, with the bank appointed by the National Treasury to service Ithala SOC depositors. 

This process began on 8 December after Ithala’s compliance issues resulted in the Prudential Authority applying for its liquidation to protect depositors from further losses. 

Ithala is not a bank, holding no banking licence. The institution operated under an exemption from the Finance Minister that enabled it to receive deposits. 

The exemption and repeated extensions aimed to give Ithala time to regularise its activities and comply with banking regulations to receive a licence. 

However, it has failed to do so, with it still suffering from various compliance issues. The Prudential Authority applied for its liquidation in 2025 to try to recover funds for its depositors. 

The National Treasury guaranteed depositor funds, which it has now appointed FNB to pay out to Ithala clients with funds at the ‘bank’.

Since 8 December 2025, FNB has disbursed just over R1 billion to Ithala customers, representing almost 50% of the total value allocated for disbursement. 

This milestone marks an important step for Ithala customers as access to their funds continues to be restored in line with the National Treasury’s guarantee. 

“Reaching the R1 billion mark in under a month is a significant achievement for us and speaks to the dedication of our teams in delivering this process efficiently and responsibly,” FNB CEO Harry Kellan said. 

“While the payouts are still underway, our priority remains on assisting every eligible customer in an orderly, secure, and dignified manner.” 

The payout process is rolling out in phases, with customers notified directly via SMS when it is their turn to visit a branch. Each SMS includes the customer’s branch visit date, allowing the process to be managed smoothly and efficiently. 

FNB encouraged customers to wait for their official SMS notification before visiting a branch. Those who arrive without an SMS may experience longer waiting times. 

“We understand that many customers are eager to access their funds and want to reassure them that each of them will be contacted directly,” Kellan said.  

“Allowing the SMS-based scheduling process to run its course helps us manage queues effectively and ensures a better experience for all.” 

Ithala’s collapse

Over the past decade, Ithala has had significant issues in complying with South African banking regulations due to widespread mismanagement of depositor funds. 

The Prudential Authority’s application to have the ‘bank’ liquidated resulted in the appointment of a Repayment Administrator to secure depositor funds. 

This resulted in independent forensic accountants assessing Ithala’s liquidity and solvency. The assessment revealed that the ‘bank’ was technically insolvent. 

Specifically, Ithala’s liabilities amount to R2.79 billion, while its total assets stand at R2.35 billion, resulting in a shortfall of R441.63 million.

The Prudential Authority had previously reported that, between 31 March 2008 and 31 March 2024, Ithala incurred losses totalling R520 million.

Prior to FNB’s appointment by the National Treasury, KwaZulu-Natal Premier Thami Ntuli admitted the struggles Ithala has had in complying with relevant regulations. 

“The issue of compliance for Ithala is a significant one for it to attain a banking licence, because it has been operating with an exemption that has been halted,” Ntuli said. 

“What we are saying is that we are going to support the institution to meet the compliance requirements, so that it can operate under normal circumstances.”

Experts, such as Denker Capital’s Kokkie Kooyman, have explained that Ithala’s problems run deep and cannot be solved overnight. 

Kooyman said tackling Ithala’s challenges would require a complete cultural shift within the institution to become good custodians of depositor funds. 

Chief among Ithala’s issues is the quality of the bank’s loan book, which may show that a significant portion of its loans cannot be paid back. 

Another key issue is Ithala’s operating systems, which may not be adequate for a company that acts as a bank. 

This is a direct result of the company’s management, which has resulted in clients losing trust in the institution and minimal action being taken to do what is necessary to meet regulatory requirements. 

“The problem has been growing for around three years, which is when the Prudential Authority first warned about Ithala’s operations,” Kooyman said.

“The shareholders failed to understand the extent of the problem and the risk of a shutdown from the Prudential Authority.”