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Access to Deposits Preserved Despite Trustco Bank’s Suspension

By:Justicia Shipena
Despite the Bank of Namibia’s (BoN) temporary suspension of Trustco Bank, clients would retain access to their deposits.
Trustco Bank’s ability to function as a financial institution was suspended with immediate effect by BoN on Friday.
The suspension came after the central bank met with the Minister of Finance and Public Enterprises, Ipumbu Shiimi and decided to revoke Trustco Bank’s operating licence.
According to BoN, the decision to suspend Trustco Bank’s licence was made due to repeated noncompliance and major inadequacies, most of which remain unsolved internal control vulnerabilities.
“Despite the suspension, customers will have access to their deposits at Trustco Bank,” said Johannes !Gaxawab, the BoN Governor.
!Gaxawab emphasised the importance of the bank’s customers who have credit facilities to maintain and honour their loan repayment obligations in accordance with their agreed contractual terms to avoid listing on credit bureaus and/or any other measures that may be taken to recover such funds.
The Governor, on the other hand, stated that the suspension is just temporary and is contingent on Trustco Bank correcting certain defined and disclosed instances of noncompliance within six months from 18 August 2023.
!Gaxawab stated that if Trustco Bank continues to be non-compliant with specific sections of the Banking Institutions Act and the issues that led to its suspension at the conclusion of the suspension term, the BoN would take additional action as authorised by the Act.
Shiimi introduced a bill in the National Assembly in June this year aimed at amending the Banking Institutions Act of 1998 in order to give the BoN more power in resolving failing banking firms.
“This is despite several repeated interventions by the BoN over an extended period directing Trustco Bank to rectify these shortcomings,” !Gaxawab stated.
The suspension, he said, is intended to protect the integrity of the banking system and formal banking sector in light of the BoN’s concerns about Trustco Bank’s internal control environment, as well as its failure to comply with orders and directives issued by the central bank.
Furthermore, he stated that the suspension is meant to safeguard both internal and external stakeholders’ interests.
Trustco Bank’s suspension comes at a time when it is challenging BoN in the Windhoek High Court, claiming the central bank has declined to pay N$1 billion to launch its bank.
The legal struggle began in 2022, shortly after Trustco, led by CEO Quinton van Rooyen, won an urgent action in South Africa’s High Court to prevent the JSE from suspending Trustco’s shares in August of that year.
“The public is hereby informed that the decision to suspend the banking institution’s licence is taken independent of ongoing litigation involving Trustco Bank and the regulator in the High Court of the Republic of Namibia. Such court matters shall proceed as planned,” !Gaxawab said.
He concluded that the BoN remains dedicated to ensuring banking sector stability and integrity by carrying out its supervisory duty in accordance with the Banking Institutions Act.
Trustco Bank has been operating in the local market since December 2016, after purchasing Fides Bank and obtaining a commercial banking licence from BoN.
In response, Trustco has flung mud at !Gawaxab, accusing him of a bad reputation, “which is reflected in his D+ rating in the Global Finance Central Banker’s Report,” it said in a statement released on Sunday.
Trustco has further noted that the fact that no Namibian-owned bank has survived since independence is cause for reflection.
“Our objective is to ensure that the interests of all stakeholders are safeguarded in a manner reflective of the highest standards of accountability and transparency,” the Group said.
Its CEO Quinton Van Rooyen stated that while the suspension creates additional challenges, Trustco is committed to achieving economic fairness for all Namibians.
“Our mission has always been financial inclusion and wealth creation. Trustco Bank represents a crucial avenue for advancing this purpose,” said Van Rooyen.

Justicia Shipena

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