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FNB terminates Ayo’s banking facilities

Seemingly without ‘valid reason’.
Image: Moneyweb

First National Bank has terminated the banking facilities it provides to Iqbal Survé’s Ayo Technology Solutions, Ayo said in a statement to shareholders after markets closed in Johannesburg on Thursday.

“Shareholders are advised that the company’s current bankers, First National Bank, have given the company notice to close its transactional banking facility with effect from 3 May 2021,” it said, adding that it does not have any lending facilities with the bank.

“Despite the company’s best efforts, FNB has not provided Ayo with what it regards as valid reasons for termination. The company believes that it is entitled to fair treatment and as a result has instituted legal proceedings against FNB for its decision to close the transactional banking facility.”

The Public Investment Corp, which manages and invests civil servants’ pension money, controversially subscribed for a 29% stake in Ayo before its listing on the JSE, paying R4.3-billion for stake. On Tuesday, Ayo’s total market value was R3.2 billion. It said it is now “reviewing its options” for an alternative transactional banking facility.

An FNB spokesman told TechCentral via e-mail that the bank had given Ayo “reasonable notice to terminate its banking services”. However, “due to the confidential nature of our client relationships, we cannot provide any further details on the matter”.

Absa, too
Earlier this month, amaBhungane reported that Absa last year sent letters to companies directly or indirectly controlled by Survé’s Sekunjalo Investment Holdings, giving 60 days’ notice of termination of services. Companies affected included Ayo, African Equity Empowerment Investments and Premier Fishing.

AmaBhungane reported that in subsequent court proceedings late last year, Absa insisted that the bank’s “continued association with customers in the Sekunjalo Group posed intolerable reputational, commercial, and legal risks”.  — (c) 2021 NewsCentral Media

Duncan McLeod is Editor of TechCentral, on which this article was first published, here.

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In my banking career which spanned 40 years the banks are not compelled to give reasons for closure. If the client insisted the stock answer was unsatisfactory conduct. Internally the reasons for closure were noted but not for general consumption. There is also the matter of client confidentiality so FNB are not likely to advise to all and sundry the reasons for closure and especially to the press

Just a thought.
But who monitors the Banks Doggeeeeeness? Definitely not the SARB

There is also the little matter of freedom of association which hopefully is still part of our constitution.

Nobody would have known at all if Ayo had not been so arrogant as to make an issue of this.

Try the Gupta bank.

I don’t see how any company can be compelled by any court to keep XYZ as a client.

Hang in in there Iqbal, the ANC will be starting a state bank which I’m sure will be happy to accommodate you. Meanwhile you’ve still got a couple of weeks in which to buy Bitcoin.

I should hope Ayo does not have lending facilities at FNB! They still had about 4,500,000,000 of PIC pensioner cash – if they haven’t blown that buying more companies yet.

Does PIC have a preservation order on that cash?

interested to understand why the banks aren’t doing similar to Bain&co and McKinsey..

End of comments.

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