FNB denies ‘poaching’ clients from struggling Ithala

FNB denies ‘poaching’ clients from struggling Ithala

The Reserve Bank’s Prudential Authority’s latest move to liquidate Ithala Bank has been the subject of a heated debate during a meeting between lawmakers and key players in the banking sector.

Ithala Bank
Supplied: Sandile Ndlovu

Parliament's Portfolio Committee on Trade and Industry and the Standing Committee on Finance quizzed members of the banking sector in a joint meeting held in Cape Town on Tuesday.

The meeting aimed to tackle matters of competition, the provision of credit for productive activities, and transformation in the sector.

uMkhonto Wesizwe Party member Des Van Rooyen alleged that Ithala’s database had been leaked to First National Bank (FNB).

“It has been brought to our attention by our constituents that, out of desperation, Ithala’s database has been handed over to FNB. As we speak, Ithala’s clients are being harassed by FNB urging them to join the bank.”

Van Rooyen accused the Reserve Bank’s Prudential Authority of disregarding parliament’s resolution to unleash an assistive process at the struggling bank.

“Parliament recently resolved that a more considerate and gradual process should be embarked upon by all stakeholders to ensure that Ithala is supported to be a full-fledged financial service provider. Contrary to that, the PA under the leadership of national treasurer – even though treasury is always trying to convince us that it's not in charge of your activities – snubbed that process.”

The African National Congress in KwaZulu-Natala and the MK Party have expressed some opposition to the PA’s report that Ithala, which has more than 250,000 account holders, is technically and legally insolvent and has started the process of liquidation.

Van Rooyen’s sentiments were echoed by the finance committee chair, Joe Maswanganyi: “The Financial Sector Conduct Authority says there are 30 banks which it monitoring, and you just take the decision to transfer the accounts of Ithala clients to FNB. How did you arrive at that? Are you [the PA] above Parliament? You and treasury? You were so quick to liquidate Ithala.”

READ MORE: ANC in KZN vows to protest Ithala Bank liquidation

FNB’s chief executive officer, Harry Kellan, explained that the bank was not seeking to pouch customers from Ithala.

Van Rooyen questioned whether this was not a violation of the Protection of Personal Information Act.

“It’s not information from Ithala. Through the Banking Association of South Africa, we were asked to help the grant recipients. They were paid today. In a very short time, we were asked to open 60,000/70,000 accounts with information from Sassa. It would have been much easier for us, from the pressure in the room, to say that it was a financial decision. The cost of opening up and going through the process, issuing cards in our branches, having queues, etcetera, far outweighs the revenue we are going to make,” Kellan responded.

This comes as the Special Investigating Unit announced on Monday that President Cyril Ramaphosa authorised investigations into alleged maladministration at the Ithala Development Finance Corporation, a subsidiary of Ithala Bank and the Kokstad municipality.  


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