First National Bank (FNB) has been appointed by the National Treasury to repay Ithala SOC Limited’s more than 257,000 depositors, marking the start of a large-scale, state-backed rescue process to return frozen funds to customers who have gone nearly a year without access to their money.
The payouts follow the Treasury’s announcement it will make up to R2.2bn available to enable the repayment of all verified Ithala deposits. The bank has been under administration and was declared technically and legally insolvent earlier this year, prompting urgent intervention from provincial and national authorities to protect depositors.
The repayment programme, according to the Treasury, begins on December 8 and will run through FNB’s national branch network, with extended operating hours in KwaZulu-Natal, where the majority of Ithala clients are.
“These Ithala customers have not had access to their funds since January this year and helping them is a priority for us,” said Jacqui O’Sullivan, FNB executive for corporate affairs.
She said the bank would use its national footprint, including its branch and ATM network, to make the payout process “as simple and easy as possible”.
The Treasury said the funds will only be released once each customer has been verified to prevent fraud and ensure payments reach the correct recipients.
Verification will take place at FNB branches, not Ithala branches, and customers will first receive an SMS from FNB detailing the date they should visit a branch and the documents they need to bring. The Treasury emphasised that no payments will be issued without this SMS and customers should be alert to scams.
At the branch, customers will need to produce a South African ID, proof of residence and proof of a bank account where their money can be deposited. For those who do not bank with FNB, payments can be made into any South African account where they are the primary account holder. FNB will also offer eWallet payments and assist customers who want to open a new FNB account for the payout.
Once all verification and compliance checks are complete, payments will be made within about two days. FNB said it will manage the process to reduce long queues, especially in KwaZulu-Natal. From December 8 to 31, FNB branches across the province will operate from 7:30am to 5pm to accommodate the expected influx.
The repayment plan marks a breakthrough after months of uncertainty, including legal disputes between Ithala’s board and the Prudential Authority (PA). In recent court proceedings, a full bench of the Pietermaritzburg high court criticised Ithala’s board for what it described as arrogance and years of ignoring regulatory instructions dating back two decades.
The PA had repeatedly warned Ithala needed to obtain a banking licence or cease deposit-taking activities, but the institution continued to operate under temporary exemptions that finally expired in 2023.
When the bank failed to secure a required government guarantee for its capital shortfalls estimated at about R250m, the PA moved to appoint a repayments administrator to protect depositors. The regulator later filed for the provisional liquidation of Ithala, citing insolvency and the risk that customers could lose part or all of their deposits.
Ithala remains under administration pending further legal proceedings, including an upcoming appeal at the Supreme Court of Appeal.
KwaZulu-Natal premier Thamsanqa Ntuli, speaking at a media briefing on Monday, welcomed the payout process and apologised to affected families and businesses. He said thousands of people had endured severe hardship as a result of the freeze on deposits, including struggling to pay rent, school fees and living expenses.
“It is deeply regrettable that this period of uncertainty resulted in significant disruptions to the livelihoods of our people and businesses,” Ntuli said.
“On behalf of the government of KwaZulu-Natal we sincerely and profoundly apologise to every individual, family and business that was affected.”
Ntuli said the province, the National Treasury and Ithala had worked day and night to secure the agreements needed to release the R2.2bn and unlock the payout process before the Christmas period. He described the development as “a historic breakthrough” and said support teams would be deployed to assist elderly and rural customers, many of whom may struggle with documentation or travel.
Depositors have until 2028 to claim their payouts, giving customers a wide window to complete verification and access their money. However, customers with outstanding loans from Ithala are still required to continue paying those loans into the dedicated Absa account provided by the administration team.
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