BoN closes in on Trustco Bank

The Bank of Namibia on Friday temporarily suspended Trustco Bank Namibia’s banking license with immediate effect and gave the institution six months to comply with the law or face subsequent consequences.“The decision to suspend Trustco’s Bank’s license resulted from numerous non-compliance and serious shortcomings, of which several internal control weaknesses remain unresolved. This despite several repeated interventions by the bank [BoN] over an extended period directing Trustco Bank to rectify these shortcomings,” BoN governor Johannes !Gawaxab said in a statement.!Gawaxab said the decision was taken after consultation with the minister of finance and public enterprises, Iipumbu Shiimi.Despite the suspension, !Gawaxab stressed that clients will have access to their deposits at Trustco Bank. He also urged clients to continue repaying their loan obligations.Legal battleTrustco Group Holdings (TGH) fully owns Trustco Bank Namibia (TBN). Quinton van Rooyen, the group managing director and chief executive officer of Trustco, is the majority shareholder in TGH.In a statement yesterday, Van Rooyen said while the suspension poses new obstacles, “Trustco remains unwavering in the quest towards economic justice for all Namibians”.In September last year, the BoN applied to the High Court of Namibia to liquidate Trustco Bank, alleging TBN was both factually and commercial insolvent, and as such is unable to pay its debts.Trustco opposed the central bank’s move, alleging the BoN’s directives and decisions were “unconstitutional on several grounds”.!Gawaxab on Friday said the BoN decision to temporarily suspend TBN’s banking license was taken independently of the ongoing litigation between the two parties in the High Court of Namibia. “Such court matters shall proceed as planned,” he added.RecapitalisationThe saga between the BoN and TBN dates back to September 2020 when the central bank conducted an onsite examination of Trustco Bank. Subsequently, the central bank required TGH to make a total capital injection of N$100 million into TBN – payable in tranches of N$33.3 million annually over a three-year period.By March 2021, TGH had injected the first tranche into TBN. According to !Gawaxab’s founding affidavit filed last November as part of the BoN’s application the High Court to liquidate TBN, subsequent steps and proposals by TGH didn’t constitute a capital injection.An assessment done by the BoN late last year concluded that TGH “simply does not have the ability” to recapitalise TBN.In its unaudited interim results for the six months ended 28 February 2023, TGH reported a loss of N$250 million and stated that the group’s accumulated loss at the end of the reporting period stood at N$1.9 billion.At the end of February 2023, the group had N$4 million in cash and cash equivalents, down from N$38 million for the same period in 2022.FinbondIn June this year, TGH said it intended to sell 49% of its loss-making subsidiary, Trustco Finance, to loss-making Finbond Group, a financial services institution operating in South Africa and North America.Finbond said it entered into an agreement with TBN Holdings Ltd to buy the 49% stake in TF.Trustco Finance (TF) made a net loss before tax of N$179 million based on audited results for the year ended 31 August 2022, Finbond said in a statement regarding the proposed deal.Finbond’s annual report shows the group suffered an operating loss of nearly R312.3 million in the year ended 28 February 2022, compared to a loss of about R313.4 million in the previous months. In its latest interim results, Finbond reported a loss before tax of nearly R134.7 million.TermsAccording to Finbond, the purchase consideration payable by it will be R60 million for 49% of the shares in TF.Half of the money would have been payable in cash on the signature of the definitive agreement on or before 31 July 2023.The remaining 50% of the purchase consideration will be payable when the balance sheet of TF as at 31 August 2023 has been “restructured to simplify the structure of Trustco Finance and to reflect the intention of the parties and has been audited without any qualification or modification”, Finbond said.The anticipated effective date of the transaction has been extended to 1 September 2023.No subsequent announcements on the deal have been made by either TGH or Finbond.

BoN closes in on Trustco Bank

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Republikein 2025-08-06

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BoN closes in on Trustco Bank

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