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AYO seeks interdict to stop FNB from closing bank accounts

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JSE-listed AYO Technology Solutions has launched an urgent court bid to stop First National Bank (FNB) from closing its bank accounts.

FNB has given AYO until 3 May to find a new bank, after which it will close the company’s transactional banking facility.

The bank says it elected to exercise its contractual right to terminate its banking relationship with AYO due to the associated reputational and business risks.

Besides the risks, FNB says the bank’s relationship with a customer is not governed by administrative law, but private law of contract, which means there is no legal obligation on the bank to provide AYO with reasons for closing bank accounts.

This prompted AYO to approach the South Gauteng High Court on an urgency basis to halt FNB’s plans.

The company, which recently cited political interference as responsible for its woes, wants the court to interdict and restrain FNB from deactivating or closing its accounts and stop it from ending the “bank-client” relationship.

The AYO and FNB matter mirrors that of the Gupta family saga in 2016, in which they were booted out by all banks after allegations of massive irregular dealings surfaced.

South African banks refused to do business with all Gupta entities, including those that were in the ICT, mining and media sectors.

In the AYO matter, CEO Howard Plaatjes and other executives claim there is an engineered attack on company operations and the banks are using that to close transactional facilities.

AYO has also blamed negative media reports for scuppering some of its deals.

Last month, AYO called for a parliamentary inquiry into four entities that it has clashed with in recent months, accusing them of victimising and unfairly censuring the tech investment firm.

The four, the Johannesburg Stock Exchange, Companies and Intellectual Properties Commission, Public Investment Corporation and Financial Sector Conduct Authority, have all had legal clashes with AYO.

In his affidavit in court, Plaatjes says AYO generates revenue in excess of R2 billion annually by servicing over 500 companies, including those in financial services, healthcare, education and media, which is why it needs its banking facilities to remain in place.

“Banking facilities are important to AYO’s business and without which AYO cannot conduct business,” he tells the court.

Plaatjes says the company employs 1 200 people and has an annual salary bill of R430 million and pays taxes in excess of R495 million, which include R289 million in VAT, R98 million in income tax, and R108 million in Pay-As-You-Earn.

The firm argues it cannot be in business without access to a bank account because its ability to obtain financial services − including credit, deposit, payments, insurance and other risk management services − is central to AYO being able to carry its purpose and function as a business. “Without banking services, none of this may be obtained.”

AYO wants the court to determine whether the termination clause used by FNB is unreasonable, and if reasonable, whether it should be enforced in its case.

“It is unconstitutional and against public policy for FNB to terminate the (bank) agreement and the resultant banking relationship with AYO in the absence of good cause. FNB has failed to show there was good cause for the termination,” argues Plaatjes in his affidavit.

In addition, he says, although FNB accepts it can only terminate the agreement upon reasonable notice, it has failed to give AYO reasonable notice.

“I respectfully say the reasonableness of the notice period must be considered in light of, inter alia, the extent of banking relationship, the factors giving rise to FNB’s decision to terminate and when those merged, and the impact of premature termination on the business of AYO.”

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