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Bank of Namibia Vows to Fight Trustco

By: Nghiinomenwa-vali Erastus

In a two-sentence press release yesterday, the central bank has indicated to the market they will defend the central bank supervisory actions to deny Trustco Bank Namibia commercial status.

The Bank of Namibia (BoN) director for Communications Kazembire Zemburuka wrote that the central bank had taken note of the legal action launched by Trustco Bank, and they are ready to defend their actions.

“The Bank will vigorously defend its supervisory actions,” wrote Zemburuka.

He explained further that the financial system remains stable and sound due to the effective regulatory and supervisory framework, which fosters a world-class financial system.

Trustco is just coming from a fresh victory against the Johannesburg Stock Exchange (JSE) as its urgent interdict to restrain the JSE from suspending its listing was upheld today.

Domestically, Trustco announced this week that they are filing a Notice of Motion to Review several directives and decisions issued by the central against Trustco Bank Namibia (TBN) to become a full commercial bank, wrote TBN spokesperson Neville Basson.

He said this is after two years of just correspondences and threats between TBN, Trustco Group Holdings Ltd (TGH), and Bank of Namibia to enable TBN to enter entire commercial banking operations.

Basson added that even after TGH offered to capitalize TBN’s balance sheet by a further N$1 billion, the central bank still denied their application.

“TBN and TGH, unfortunately, had no choice but to file a Notice of Motion to Review several directives and decisions issued by BON against TBN since 25 July 2022 in the High Court of Namibia, in Windhoek on Friday 23 September 2022,” he wrote.

In terms of the notice, TGH and TBN claim that the directives and decisions issued by BoN were unconstitutional on several grounds, Basson stated.

Firstly, sections 72A and 73B of the Banking Institutions Act 2 of 1998 (the Act) are unconstitutional, as they violate Article 10(1) of the Namibian Constitution, practising unfair discrimination, as it only allows specific orders to be reviewed.

Secondly, he explained that section 58(4) of the Act is unconstitutional, as it serves to restrict TBN’s Article 21(1)(j) fundamental freedom to carry on its business.

Finally, both the Act and the Bank of Namibia Act were passed without compliance with Articles 98 and 101 of the Constitution.

Trustco Group managing director Quinton van Rooyen stated that Article 101 of the constitution compelled Parliament to consider economic growth when it enacted the legislation under discussion.

“Not once, not even a single time, did Parliament use the concept of economic growth in any of these Acts. The long title of the Banking Institutions Act emphasizes only ‘control, supervision and regulations,” wrote Van Rooyen.

He said the ‘developmental mindset’ is detrimental to economic growth and wealth creation for all Namibians and the country “constitutional writers had exactly that in mind when article 98 was adopted from the ruling parties’ Constitution”.

According to Trustco team analysis, since Independence, Namibian depositors have loaned capital daily to South African banks.

“This deprives Namibian businesses and individuals of the capital required to grow the Namibian economy, which in turn should create jobs and decent living conditions as envisaged in Article 98 of the Namibian Constitution,” Trustco analysis highlighted.

Article 98 reads as follows: (1) the economic order of Namibia shall be based on the principles of a mixed economy to secure economic growth, prosperity, and a life of human dignity for all Namibians.

However, according to Trustco’s analysis, “Namibia remains a net exporter of capital to South African banks”.

Over the past 12 months, a total of N$6.97 billion, or 63% of the country’s total debt issued, was to the non-resident private sector, the team analysis indicated.

The Trustco team added that in the case of the SME Bank, millions of such exported capital were lost in SA banks.

Van Royen highlighted the hiatus created by failing Namibian banks established after Namibia’s Independence had left most of the Namibian banking sector under foreign control.

“This results in a significant barrier of entry for a 100% Namibian-owned start-up bank like Trustco Bank to enter the banking industry. Such a barrier to entry results in a loss of control for Namibia over its local economy,” he wrote.

Namibian Banks that disappeared since independence are City Savings and Investment Bank, Swabou Bank, E-Bank, and SME Bank, whilst banks established pre-independence went from strength to strength,” he added.

In the statement released, it has been indicated that Trustco Group’s current investment in Trustco Bank represents 1% of its Net Assets of N$6.5 billion.

According to the insights provided by Basson, Trustco Bank is a small 100% Namibian-owned bank with limited deposits and a small loan book, but with immense potential.

The Trustco team indicated that the Namibian court system played a significant role in the achievement of Independence from South African rule and the protection of fundamental rights of every Namibian.

However, they acknowledged that the second phase of the struggle was economic emancipation for Namibians.

This time, a world-renowned constitution and the Namibian High Court will be asked to review key pieces of economic legislation as Trustco Group and Trustco Bank question its constitutionality. Email:

Nghiinomenwa-vali Erastus

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