Trust Banking Corporation

Trust Banking Corporation, commonly known as Trust Bank or TBC, is a Zimbabwean commercial banking brand regulated by the Reserve Bank of Zimbabwe. The institution began in 1996 as Trust Merchant Bank and converted its banking licence to a commercial banking licence in 2000, adopting the Trust Banking Corporation identity as it expanded its activities. The bank was part of Trust Holdings Limited, a Zimbabwean financial-services holding company with interests in banking, insurance broking, property, agriculture and finance-related activities. Trust Bank experienced rapid growth during the early 2000s. By 2003, it was described as Zimbabwe's largest bank by balance-sheet size. That expansion coincided with increasing pressure in the Zimbabwean economy and weaknesses in the institution's internal controls, liquidity management and risk governance. According to the referenced account, bank managers became involved in non-core activities while the institution's financial position deteriorated. The bank also suffered a large internal fraud, reported as approximately ZW$7 billion, which further weakened liquidity and exposed shortcomings in its control systems. By December 2003, some other banks, including Standard Chartered Zimbabwe and Stanbic Bank Zimbabwe, had begun refusing to settle Trust Bank cheques because of concerns about its liquidity. Trust Bank was removed from the central clearing system on several occasions. In response, Reserve Bank of Zimbabwe governor Gideon Gono required the resignation of chief executive William Nyemba, finance director Nyevero Hlupo and executive director Chris Goromonzi as a condition for receiving central-bank liquidity support. Philip Magwada was subsequently appointed managing director and became involved in the institution's restructuring and eventual transfer into a new banking group. The Reserve Bank closed Trust Bank in 2004, alongside Barbican Bank and Royal Bank Zimbabwe. Their assets were combined to establish Zimbabwe Allied Banking Group, commonly abbreviated as ZABG. The regulatory intervention was attributed principally to illiquidity and irresponsible management of depositors' funds. Former executives challenged the transfer of Trust Bank's assets into ZABG through the courts. The High Court dismissed the relevant cases, and the Supreme Court also dismissed the appeals while holding that the appellants had not first followed the statutory appeal route through the Reserve Bank. In September 2010, the Reserve Bank reversed its earlier position and reissued commercial banking licences to the three previously closed institutions. ZABG retained its own licence, increasing the number of commercial banks operating in Zimbabwe at that time. Trust Bank resumed business as a self-sufficient institution on 13 December 2010. By April 2012, it reportedly operated ten branches. A December 2011 profile described it as a small Zimbabwean financial-services provider with total assets of approximately US$38.5 million and shareholders' equity of about US$14.8 million; those figures are historical and are not presented as current financial data. Trust Banking Corporation's identity is therefore associated with both rapid pre-crisis expansion and a later regulatory rehabilitation and return to the Zimbabwean banking market.

Trust Banking Corporation originated in 1996 as Trust Merchant Bank in Zimbabwe. In 2000, it converted its licence to that of a commercial bank, enabling it to broaden its activities and operate under the Trust Banking Corporation name. The institution expanded quickly and, by 2003, was described as the country's largest bank by balance-sheet size. The growth phase was undermined by Zimbabwe's deteriorating economic environment and by problems inside the bank. Management became involved in activities outside the bank's core business, while liquidity and risk controls weakened. A staff-related fraud reportedly cost the institution approximately ZW$7 billion. The incident was associated with inadequate internal controls and risk-management systems and aggravated an already fragile liquidity position. The pressure became visible in late 2003. Standard Chartered Zimbabwe and Stanbic Bank Zimbabwe reportedly declined to settle Trust Bank cheques, while the bank was removed from the central clearing system more than once. Reserve Bank of Zimbabwe governor Gideon Gono demanded the resignation of chief executive William Nyemba, finance director Nyevero Hlupo and executive director Chris Goromonzi as a prerequisite for liquidity assistance. Philip Magwada subsequently became managing director and helped oversee the bank's transition into a new institutional structure. In 2004, the Reserve Bank shut Trust Bank, together with Barbican Bank and Royal Bank Zimbabwe. The assets of the three failed or distressed institutions were combined to form Zimbabwe Allied Banking Group, or ZABG. The intervention was based on concerns that Trust Bank was illiquid and that its managers had mishandled depositors' funds. Former executives contested the asset transfer in court. The High Court rejected the claims, and the Supreme Court also dismissed the appeals, while explaining that the appellants had not used the legally prescribed first-stage appeal process to the Reserve Bank concerning the alleged disposal of the assets. The restructuring did not permanently end the Trust Bank identity. In September 2010, the Reserve Bank reversed its earlier decision and restored commercial banking licences to Trust Bank, Barbican Bank and Royal Bank Zimbabwe. ZABG kept its licence, and the reauthorisations increased the number of commercial banks in Zimbabwe at the time. Trust Bank resumed operations on 13 December 2010 as a self-sufficient bank. By April 2012, it was reported to have ten branches. Trust Banking Corporation was wholly owned by Trust Holdings Limited, a Zimbabwean financial holding company also known as the Trust Group of Companies. The group was described as having interests in finance, leasing, insurance, banking, property and agriculture. Trust Bank was its principal banking subsidiary, alongside Trust Insurance Brokers, Trust Properties and Trust Agriculture. Historical reporting placed the bank's total assets at about US$38.5 million and shareholders' equity at approximately US$14.8 million as of December 2011. Those figures belong to that reporting period and should not be interpreted as current measurements. Publicly available reference material does not establish the bank's current scale, leadership, website or operating status beyond its documented resumption of business.

• 2012

  Reported ten-branch network

  [1]Trust Banking Corporationen.wikipedia.org

  A report stated that Trust Bank maintained ten branches as of April 2012.

• 2010

  Commercial banking licence restored

  [1]Trust Banking Corporationen.wikipedia.org

  The Reserve Bank reissued Trust Bank's commercial banking licence in September.

• 2010

  Resumed banking operations

  [1]Trust Banking Corporationen.wikipedia.org

  Trust Bank restarted as a self-sufficient institution on 13 December.

• 2004

  Closed by the Reserve Bank and folded into ZABG

  [1]Trust Banking Corporationen.wikipedia.org

  The regulator closed Trust Bank and combined its assets with those of Barbican Bank and Royal Bank Zimbabwe to create Zimbabwe Allied Banking Group.

• 2003

  Reached reported peak in balance-sheet ranking

  [1]Trust Banking Corporationen.wikipedia.org

  Trust Bank was described as Zimbabwe's largest bank by balance-sheet size, although liquidity and governance problems were emerging.

• 2000

  Converted to a commercial banking licence

  [1]Trust Banking Corporationen.wikipedia.org

  Trust Merchant Bank changed its licence to commercial banking, supporting its transition to Trust Banking Corporation.

• 1996

  Founded as Trust Merchant Bank

  [1]Trust Banking Corporationen.wikipedia.org

  The institution was established in Zimbabwe under the name Trust Merchant Bank.

A Zimbabwe-focused commercial bank within the broader Trust Group of Companies, serving as the group's banking arm.

• Commercial banking · 2000

  Trust Bank commercial banking

  Trust Banking Corporation's core business was commercial banking in Zimbabwe. Public reference material identifies the institution as a licensed commercial bank and describes branch-based banking activity, cheque settlement and general financial services. Detailed product names, account specifications, lending terms and digital channels are not established in the supplied sources.

• Retail and business banking infrastructure

  Branch banking network

  Following its return to the market, Trust Bank operated through physical branches. The available reference material reported a network of ten branches in April 2012. It does not provide enough information to identify the individual locations or to confirm the network's later development.

• Internal fraud and control failures

  Trust Bank reportedly suffered fraud of approximately ZW$7 billion committed by its own staff. The incident was linked to weak internal controls and risk-management systems and contributed to the bank's worsening liquidity position.

  Source

Read more

• 2010

  Reissue of commercial banking licenceOther

  Background

  The Reserve Bank reconsidered the earlier closure of Trust Bank and two other institutions.

  Action taken

  The regulator reissued Trust Bank's commercial banking licence in September 2010.

  Aftermath

  Trust Bank resumed operations as a self-sufficient entity on 13 December 2010.

  Source

• 2004

  Regulatory closure and asset consolidationOther

  Background

  The bank faced severe liquidity problems, internal-control concerns and allegations that management had mishandled depositors' funds.

  Action taken

  The Reserve Bank closed Trust Bank and combined its assets with those of Barbican Bank and Royal Bank Zimbabwe to establish ZABG.

  Aftermath

  Former executives challenged the asset transfer in court, but the litigation did not overturn the consolidation.

  Source

• 2000

  Conversion from merchant banking to commercial bankingStrategy

  Background

  The institution sought to expand its banking role after operating as Trust Merchant Bank.

  Action taken

  It converted its banking licence to a commercial banking licence and transitioned to the Trust Banking Corporation identity.

  Aftermath

  The change enabled rapid expansion, with the bank later described as Zimbabwe's largest by balance-sheet size in 2003.

  Source

• 2010

  Commercial banking licences reissued to Trust Bank and other closed institutions[1]Trust Banking Corporationen.wikipedia.org

  Regulation · Other

  The Reserve Bank reissued commercial banking licences to Trust Bank, Barbican Bank and Royal Bank Zimbabwe while allowing ZABG to retain its licence.

• 2010

  Trust Bank resumes operations as a self-sufficient institution[1]Trust Banking Corporationen.wikipedia.org

  Other · Regulation

  Trust Bank restarted banking operations on 13 December 2010 following the restoration of its commercial banking licence.

• 2004

  Trust Bank closed and its assets transferred into ZABG[1]Trust Banking Corporationen.wikipedia.org

  Regulation · Other

  The Reserve Bank closed Trust Bank along with Barbican Bank and Royal Bank Zimbabwe. Their assets were combined to form Zimbabwe Allied Banking Group.

• 2003

  Trust Bank removed from the central clearing system amid liquidity concerns[1]Trust Banking Corporationen.wikipedia.org

  Regulation · Other

  Several Zimbabwean banks reportedly stopped settling Trust Bank cheques, and Trust Bank was excluded from the central clearing system on multiple occasions as its liquidity position worsened.

• 2003

  Reserve Bank requires senior Trust Bank executives to resign[1]Trust Banking Corporationen.wikipedia.org

  Leadership change · Regulation

  Reserve Bank governor Gideon Gono made the departure of William Nyemba, Nyevero Hlupo and Chris Goromonzi a condition for liquidity support to the bank.

• Former executives challenge the transfer of Trust Bank assets[1]Trust Banking Corporationen.wikipedia.org

  Lawsuit · Regulation

  Former executives pursued litigation over the amalgamation of Trust Bank's assets into ZABG. The High Court and Supreme Court dismissed the cases, with the Supreme Court referring to the statutory requirement to appeal first to the Reserve Bank.

1. 1Trust Banking Corporationen.wikipedia.org