The federal government has taken over three commercial banks – Union, Polaris and Keystone – following the dissolution of their management and boards by the Central Bank of Nigeria (CBN) yesterday. In a statement signed by the Acting Director of corporate Communications, Hakama Sidi Ali, the bank said the action became necessary due to “non-compliance of these banks and their respective boards with provisions of sections 12(c), (f), (g) and (h) of Banks and Other Financial Institutions Act, 2020”.
“The banks’ infractions vary from regulatory non-compliance, corporate governance failure, disregarding the conditions under which their licences were granted and involvement in activities that pose a threat to the financial stability among others,” the apex bank said.
The CBN is expected to communicate the decision to the banks today while interim management and boards are expected to be announced straightaway to prevent a vacuum in the system. A source said the lists were being finalised last night.
The banks, according to a report of Jim Obazee, the Special Investigator appointed to probe the apex bank, were allegedly acquired by or through the connivance of the former governor of the regulatory body, Godwin Emefiele.
But some sources privy to the processes leading to the decision said the action was taken in the best interest of the industry and that it would put paid to speculation on the future of the affected banks, reposition them and restore corporate governance, which had been totally eroded.
The takeover followed a marathon meeting of the Committee of Governors (CoG), which included the governor of the CBN, Yemi Cardoso and his deputies. Obazee and his team were also at the meeting.
The Central Bank was said to have gone the extra mile in securing the approval of President Bola Tinubu, even though it has the power under BOFIA to dissolve the managements/or board of any financial institution where there is corporate governance failure.
The request, it was informed, was granted speedily by the President yesterday before the meeting ended at 5pm. Reports and speculations about the decision sent shockwaves through the financial system, especially the affected banks and entities directly related to them.
As at 8pm, management of the affected banks who were at their office awaiting the official communications were in a panic mood and contemplating the impact of the decisions.
A top executive in one of the banks told our correspondent that they were earnestly awaiting the official communication and directive as “everything was still speculative”. But a source who was privy to details of the meeting told The Guardian that the decision was a matter of “finality” on the fate of the former boards as the process of takeover had been in the pipeline for over a week.
“The CBN is not required to secure approval from the President. But the current management, because it is determined to follow due process, had to get approval. That is also because there is no full board now. Ordinarily, the decision of the CoG should have been taken to the board for approval,” the source explained.
The action followed the recommendation of Obazee who was appointed the Special Investigator in July 2023 to probe the activities of the CBN and other relevant entities.
It would be recalled that Obazee, in his report, noted that the acquisition of Union Bank by Titan Trust Bank lacked transparency and asked the federal government to confiscate the banks.
His team uncovered the alleged role of Emefiele in the acquisition using two Dubai-based companies — Luxis International DMCC (Luxis) and Magna International DMCC (MAGNA) — owned by Vink Corporation Middle East FZC, to set up Titan Trust.
The panel reported that the two companies do not have a physical presence in Dubai as claimed in the acquisition documents. The dissolution came on the heels of the refusal of Titan Trust to honour the invitation to a meeting with the Special Investigator. Keystone and Polaris were also said to have been fraudulently acquired through proxies with the “connivance and acquisition”.
