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Quinton van Rooyen, managing director and CEO of Trustco Group Holdings. Photo Facebook
Quinton van Rooyen, managing director and CEO of Trustco Group Holdings. Photo Facebook

BoN decisions ‘unconstitutional’, Trustco alleges

Takes battle to High Court
Sections of the Banking Institutions Act which deal with offences and penalties, the prohibition on conducting of banking business by unauthorised persons, as well as winding-up or judicial management are unconstitutional, Trustco alleges.
Jo-Maré Duddy
Trustco Group Holdings’ ongoing struggle with the Bank of Namibia (BoN) to allow its banking subsidiary to become a fully commercial bank, is heading to the High Court.

Trustco Group Holdings (TGH) and Trustco Bank Namibia Ltd (TBN) on Friday filed a notice of motion in the High Court of Namibia to review several directives and decisions issued by the BoN “in the aftermath of two years of correspondence and threats” between the parties, the Namibian-based group said in a statement Monday afternoon.

Trustco alleges the BoN’s directives and decisions are “unconstitutional on several grounds”.

Reacting to Trustco’s statement, the BoN’s director of strategic communications and international relations, Kazembire Zemburuka, said the central bank will “will vigorously defend its supervisory actions”.

According to Trustco, the BoN refuses to enable TBN to enter full commercial banking operations, even after TGH offered to capitalise TBN’s balance sheet by a further N$1 billion.


“Trustco Bank is a small 100% Namibian-owned bank with limited deposits and a small loan book, but with immense potential,” TGH said in its statement.

TGH fully owns TBN. Quinton van Rooyen, the group managing director and chief executive officer of Trustco, owns 63.97% of TGH, according to its Integrated Annual Report (IAR) for 2021.

Trustco’s banking division reported revenue of N$80 million for the 11 months ended 31 August 2021, compared to N$276 million in the 18 months ended 30 September 2020.

Trustco attributed the 71%-drop in revenue mainly to the decline in interest rates during the period.

In Trustco’s latest set of financials - interim results for the six months ended 28 Feb 2022 – the group it acquired the “classical banking business investee” in 2014 for N$7 million. “It was recently promoted from its incubator stage to receive additional funding and expand it service offerings,” Trustco said.

The interim financial report stated: “This investee uses digital technology to broaden its service offerings enabling a cost-effective route to market whilst growing the investee, which had a fair value of N$13 million at the end of the reporting period, less than 1% of the group’s total investment portfolio.”


The report also mentions that Trustco approached the BoN to inject capital of up to N$1.1 billion into the commercial bank.

In its statement on Monday, Trustco maintained that Namibian depositors have loaned capital daily to South African banks since Independence.

“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 said.

It quoted Article 98: “The economic order of Namibia shall be based on the principles of a mixed economy with the objective of securing economic growth, prosperity and a life of human dignity for all Namibians.”

Trustco continued: “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 total debt issued was to the non-resident private sector. In the case of the SME Bank, millions of such exported capital were lost in South African banks.”


In terms of the notice filed in the High Court, TGH and TBN claim that the directives and decisions issued by BoN were unconstitutional on several grounds.

“Firstly, that 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, practicing unfair discrimination, as it only allows certain orders to be reviewed,” Trustco said.

Sections 72 and 73 of the Banking Institutions Act 2 of 1998 deal with offences and penalties and refers to section 5 of the Act, which regards prohibition on conducting of banking business by unauthorised persons.

According to Trustco: “Secondly, 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 as well as the Bank of Namibia Act was passed without compliance to Articles 98 and 101 of the Constitution,” Trustco said in its statement.

Section 58(4) of the Banking Institutions Act 2 of 1998 states: “The Bank [Bank of Namibia] may, notwithstanding section 346 of the Companies Act, or notwithstanding having taken action under section 56 or 57 of this Act, make an application to the High Court for the winding-up of any banking institution.”


In the statement, Van Rooyen said: “Article 101 of the Constitution compelled Parliament to take into consideration 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.

“In fact, the long title of the Banking Institutions Act emphasises only ‘control, supervision and regulations.’ The ‘developmental mindset’ is detrimental to economic growth as well as wealth creation for all Namibians and our constitutional writers had exactly that in mind when article 98 was adopted from the ruling parties’ Constitution,” Van Rooyen said.

He carried on: “The hiatus created by failing Namibian banks established after Namibia’s Independence, has left the majority 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 successfully enter the banking industry.

“Such a barrier to entry results in a loss of control for Namibia over its own local economy. 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.”

The BoN’s Zemburuka said the central bank has taken note of the legal action launched by Trustco Bank.

“The financial system remains stable and sound due to the effective regulatory and supervisory framework in place which fosters a world class financial system,” he added.


Namibian Sun 2022-12-04

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