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FISA Heritage Project – the role of BoE

The role of BoE

The Board of Executors (BoE) was the second trust company to be formed in South Africa, following the SA Association for the Administration and Settlement of Estates.

The Board of Executors was created in 1838 following a meeting of 50 of Cape Town’s eminent citizens at the home of its first secretary, Advocate JH Hofmeyer, on the corner of Burg and Strand Streets.

The SA Association for the Administration and Settlement of Estates took affront to the formation of the BoE and wrote to Queen Victoria to ask her to discontinue the operations of BoE. This handwritten letter is housed on the fifth floor of what is now Nedbank Private Wealth in Cape Town. It took some four years but finally the queen decreed that BoE could trade. In effect therefore, for the first four years of its existence, BoE was trading “illegally”.

In 1856 BoE moved to its later premises on the corner of Wale and Adderley Streets in Cape Town, formerly the site of the hospital of the Dutch East India Company and opposite the old Slave Lodge.

The concept of a “board of executors” increasingly took hold, summarised by the below dates of formation:

1856   The Graaf Reinet Board of Executors

1861   The Eastern Cape Province and Guardian Loan and Investment Company

1862   The Paarl Board of Executors

1876   The Griqualand Board of Executors

1887   ER Syfret & Company

1890   The Midland Trust and Agency Company formed

1917   The Calvinia Board of Executors

1920   The North West Board of Executors (under the support of General Jan Smuts)

In 1947, Syfrets Trust and the SA Association for the Administration and Settlement of Estates entered into a partnership agreement whereby the two companies would develop trust companies in other parts of South Africa.

Thus grew the trust company movement in South Africa. The history of BoE/Syfrets/Nedbank in itself is detailed and complicated – see the references below for more reading if you are interested. Of course, in time other trust companies came into being, largely through acquisitions by the major banks. These all have their own fascinating histories and would in due course become members of the Association of Trust Companies (ATC), the precursor to FISA, which was founded in 1932.

 

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One thought on “FISA Heritage Project – the role of BoE

  1. Hello, Eben.

    Well done on the Heritage Project, even at your “history lite” level.

    The penultimate sentence in the last paragraph above requires, I think, revision.

    I’m not aware of any Trust Company that “came into being … through acquisitions by the major banks.” On the contrary, as I recall, from October 1967 new legislation (sponsored by the legal and accounting professions) came into effect to block the formation of new Trust Companies, and restrict the right to administer deceased estates corporately or under power of attorney (eg for a surviving spouse) to these two professions (who were and remain partnership not corporately structured) and Trust Companies already registered as at that date – 17th or 27th, I think!

    This immediately added great potential value to all existing Trust Companies, both active and dormant. Anyone wanting to start a new Trust Company had to raise enough money to buy a pre-1967 registered Trust Company. R200-250 000 was the 1980 price for a dormant one with no balance sheet assets! – so quite a few millions in today’s currency just for that pre-1967 registration.

    More importantly, however, for the attorney and accounting professions, it prevented the then rapidly-expanding banking industry (remember Jan S Marais and Trust Bank?) from administering Estates (and so generating Trust Administration and Investment Management business) other than by owning a pre-1967 Trust Company. This led to the 1970s “takeover trail” by Syfrets, BoE and the banks. They sought to capture increased market share of the lucrative Trust Administration and Investment Management business generated from the administration of deceased Estates. Their first targets were the dozens of smaller, specially rural and locally-owned,Trust Companies.

    “Economies of scale” was the buzzword, and it co-incided with the advent of computerised accounting, portfolio management and financial systems. The traditional very personal services and loyalty of Trust Companies to their family clients soon came to be seen as less important than “economies of scale” as a driver of corporate profitability and “shareholder RoC” as prioritised by U.S. financial guru Milton Friedman. Thus were born the terms “high net worth clients” to describe the “target market” of financial institutions.

    Within scarcely a decade Nedbank, led by Len Abrahamse who had been Chairman of Syfrets during its takeover trail years, had in its turn swallowed Syfrets and a little later BoE – thus capturing the many pre-1967 Trust Companies already taken over by these two giants of what would today be called ‘the South African Fiduciary industry’.

    Then along came the “Brands” boom on Stock Exchanges around the world, leading Nedbank and other banks and financial corporates to brand their now in-house Trust Companies under the Bank’s or corporate’s brand name. In this way the names of the 60-plus member companies of TAoTCiSA in 1964 just disappeared from public view and independent practice – leaving the Association with a small membership of banks and hardly a handful of independent Trust Companies.

    Over several years this led to the re-visioning of the Association into FISA, whose individual professional membership requirement unfortunately excluded corporate membership of the very few surviving independent Trust Companies – one or two of which, nevertheless, still operate successfully in the old Cape Trust Company tradition..

    Hence my question as to whether that penultimate sentence needs to be revised?

    I’m afraid all of this is off the cuff, purely from memory and without checking anything at all! Colin Hickling, John Doidge, David Knott and Aaron Roup all know this history, but none more so than Colin. Louis and Nico, also, although they were more youthful (!) when the Association’s and the banks’ history hotted up in the 70s following the 1967 legislation. So check it all with them, specially Colin.

    Best wishes for the Heritage series, the Graaff Reinet expo (Colin surely involved in this?), and FISA. I’m sure Aaron will keep us informed about the Graaff Reinet expo. If we are given the date as soon as it is known, I’m sure many of us ‘oldies’ will do our best to get to the opening – so make sure the venue is wheelchair friendly!

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