Advocacy organisation Real Democracy has accused the commercial banks - protected by regulatory favouritism - of being determined to block Ithala from operating as a fully-fledged commercial bank due to the anti-competitive behaviour in the banking sector.
On Wednesday, Srinivasen Naidoo, the chairperson of the advocacy organisation, said that the Prudential Authority’s (PA) recent actions against Ithala Bank are profoundly troubling and suggest a disingenuous narrative about the bank’s solvency.
This comes after the provincial government-owned bank announced last week that it was facing an imminent closure “unless the government acts swiftly to neutralise the action of an arrogant and callous Repayment Administration (RA)”.
The South African Reserve Bank (SARB)’s Prudential Authority (PA) also released a statement announcing that it had approached the Pietermaritzburg High Court seeking an order to liquidate the bank.
Naidoo said that if the same level of scrutiny were applied to South Africa's major commercial banks and others, their precarious financial underpinnings would likely be exposed.
“Many of these institutions operate on even shakier ground, yet their practices and solvency are rarely questioned. Ithala Bank, a black-owned institution with decades of service to the people of KwaZulu-Natal, is being unfairly targeted.
“This smacks of anti-competitive behavior designed to suppress viable competition in South Africa’s banking sector.”
He mentioned that he expected Postbank to face serious scrutiny as it prepares to process Sassa grants.
“It is only a matter of time before it faces similar attacks. This pattern highlights a troubling trend: the entrenched dominance of the "big five" banks is safeguarded. At the same time, attempts to empower state-owned and community-driven financial institutions are met with hostility.
“The PA’s operations under the SARB further complicate this issue. The SARB, despite being the country’s central bank, is privately owned and operates outside the direct control of the South African government.
“Its shadowy ownership structure serves the interests of foreign and global elites rather than South Africans, exploiting our people and rich mineral resources for their gain.”
Naidoo stated that the time had come to nationalise the SARB, adding that it would realign the priorities of our financial systems, placing the needs of South Africans ahead of the interests of global corporations.
He also said that the nationalisation of banks would allow the government to regulate the banking sector in a way that promotes equity, economic growth, and social development.
“Change is possible. Leaders like Donald Trump have used executive orders to challenge the globalist grip on their financial systems. South Africa must follow suit. However, this will not happen under the current administration, led by a president who has consistently prioritised the interests of multinational corporations over the welfare of our people," he said.
Naidoo believes that South Africa needs bold, decisive, and committed leadership to drive the economic empowerment of its citizens.
“The amendment of the SARB Act is a non-negotiable step toward restoring fairness and justice in our financial sector,” said Naidoo.