As the Central Bank of Nigeria (CBN) begins to beam searchlight on the implementation strategies submitted by banks for the achievement of the new capital base, some analysts and market watchers are wondering why CBN is still keeping mute on the fate of some banks that are still under its watch.
Specifically there are concerns in the banking industry over , Union, Keystone and Polaris Banks whose boards and management were dissolved on January 10, 2024 .
CBN’s action was based on alleged corporate governance infractions and non-compliance with regulatory requirements.
Also, there was the merger and acquisition process between Providus and Unity banks, which had reached advanced stage before the Yemi Cardoso administration came on board and immediately halted the process.
Similarly, Titan Trust Bank Limited which was relatively new announced in 2022 its acquisition of the foremost Union bank.
The bank sought CBN’s no-objection approval in 2021 to its proposed consolidation with Union Bank by acquiring 91.5 per cent of Union Bank’s shares and an eventual merger between both banks.
By 2022, Titan Bank had acquired 93.4 per cent of Union Bank’s shares.
Some observers are asking whether the government could take over Union Bank which had been duly acquired by private investors led by the TGI Group.
Also whether the shareholders have completely lost out and would not have any say in the ongoing recapitalisation process.
Another issue is how the government will handle the recapitalisation exercise, differently from the earlier one of 2004/2005, where some banks were allegedly “allowed to paas the test” for ‘geographical’ balancing.
Another puzzle is whether the banks, particularly, those it’s superintending can recapitalise on their own without forbearance from CBN, despite the fact that some had enjoyed same in the past.
Will this forbearance, if eventually it becomes the only way out, be funded by the tax players again or from the monies the investors paid for acquiring them, if at all anything was paid ?
Today, some of the lenders are trying to play the ‘ geographical or legacy’ card to ensure either government assists some of them to move from the below the zero level in capitalisation or source for investors for them, since some of the legacy banks that partly formed the present lenders seeking for recapitalisation were owned by some power brokers.
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‘Besides, government would want to live by its declaration last year that the industry is stable as well as the need for the legacy or names of the individual owners of the legacy banks must be preserved by ensuring that the banks survive by all means,’ says policy analyst ”
Indeed, the dissolution of the boards in January came days after the Special Investigator of the apex bank, Jim Obazee, claimed that some of the banks were acquired by the immediate for governor of CBN, Godwin Emefiele, using fronts.
Obazee advised FG to take over the banks, strengthen and sell them off.
Section 12 of the BOFIA 2020 quoted by the apex bank as the basis for the dissolutions of the board deals with the revocation of a banking licence and the conditions under which it can happen
The affected portion of the Act read, “12.(1) Notwithstanding the provisions of this Act or any other law, the Governor may, with the approval of the Board and by notice published in the of Federal Government Gazette, or print and electronic media, revoke any licence granted under this Act if a bank-
“(c) fails to fulfil or comply with any condition subject to which the licence was granted
“(f) is involved in a situation, circumstance, action or inaction which constitutes a threat to financial stability;
“(g) fails to comply with any obligation imposed upon it by or under this Act, or the Central Bank of Nigeria Act or any other rule, regulation, guideline or directive made hereunder;
“(h) is, in the opinion of the Bank critically undercapitalised with a capital adequacy ratio below the prudential minimum or such other ratio as the Bank may prescribe.”
CBN’s statement then was silent on Titan Trust Bank, (TTB) even though the bank had reportedly acquired Union Bank.
TTB was established on the 12th of December, 2018 and obtained its national banking license on the 26th of April 2019, to operate as a commercial bank with national authorisation.
Polaris Bank was set by the CBN on September 21, 2018, to offer commercial banking services to the Nigerian public. The bank commenced services on the same day, having purchased the assets, and assumed certain of the liabilities, of the defunct Skye Bank.
Keystone Bank is a full-service commercial bank wholly owned by the Asset Management Corporation of Nigeria and was granted a banking licence on August 5, 2011, by the CBN. Keystone Bank was acquired by a special-purpose vehicle.
Union Bank of Nigeria was established in 1917 and is one of Nigeria’s long-standing and most respected financial institutions, offering a portfolio of banking services to individuals, SMEs, commercial and corporate clients. The brand is still recognized worldwide till today.
The waiting game continues as to whether government will eventually opt for the special investigator’s suggestion or ensuring that , true to its statement, the industry is stable and ‘all must reach the promised land.”