…Apex bank appoints replacements
THE Central Bank of Nigeria (CBN) has dissolved the boards and management of Union Bank, Keystone Bank, and Polaris Bank.
In a statement sent to Economy Post on Wednesday night and signed by Acting Director of Corporate Communications, Ms Sidi Ali Hakama, the CBN said the action became necessary due to the non-compliance of the three banks and their respective boards with the provisions of Section 12(c), (f), (g), (h) of Banks and Other Financial Institutions Act, 2020.
“The Bank’s infractions vary from regulatory non-compliance, corporate governance failure, disregarding the conditions under which their licenses were granted, and involvement in activities that pose a threat to financial stability, among others.”
The CBN assured the public of the safety and security of depositors’ funds and said it remained resolute in fulfilling its mandate to uphold a safe, sound, and robust financial system in Nigeria.
“Our Banking system remains strong and resilient,” the apex bank said.
Appointment of replacements
Meanwhile, the CBN has appointed new executives to oversee the affairs of the 3 banks. Yetunde Oni was appointed managing director/ chief executive officer (CEO) of Union Bank, while Mannir Ubali Ringim was approved as the new executive director of the bank.
For Keystone Bank, Hassan Imam is now the MD/CEO, whereas Chioma A. Mang is the executive director.
For Polaris Bank, Lawal Mudathir Omokayode Akintola is the MD/CEO, while Chris Onyeka Ofikulu is the executive director.
The issues
The CBN is acting on reports released by the Special Investigator, Mr Jim Obazee, who alleged that the former apex bank governor, Mr Godwin Emefiele, used proxies to acquire the three banks, Economy Post had earlier reported.
“Keystone was acquired for free as did Polaris Bank and the special investigator should liaise with the CBN to recover these two banks to the Federal Government of Nigeria,” said a statement in a letter submitted to the president.
A report on the acquisition of Keystone Bank said that a former Asset Management Company of Nigeria (AMCON) managing director moved N20 billion to Heritage Bank as placement in 2010. Consequently, Heritage Bank provided “a loan of N25 billion to the promoters of Isa Funtua/Emefiele group’s acquisition vehicles to buy Keystone Bank.”
The report said the loan was further backed by the shareholders of the bank. Upon acquisition, Keystone Bank returned the N20 billion to Heritage Bank as placement. Thereafter, Heritage Bank repaid AMCON from the cash flow created, the report noted.
The report stated when the loan granted by Heritage Bank to Isa Funtua/Emefiele’s acquisition vehicles matured with outstanding balance, the MD of Heritage Bank (which was then in serious liquidity crisis), demanded repayment but the Isa Funtua/Emefiele Group could not repay.
The MD of Heritage consequently asked his lawyers to write to Keystone Bank on two occasions, threatening to take over the institution based on the shares they had pledged as security.
After much pressure from him, the report said, Keystone Bank created internal loans of about N50 billion between June and October 2019 and moved the proceeds to repay Heritage Bank on behalf of its group.
On the acquisition of Union Bank, the report said that Titan Trust Bank (TTB) was used as the Special Purpose Vehicle (SPV) in the deal, alleging that the bank had sought CBN’s no-objection to its proposed consolidation with Union Bank (excluding its UK operations) in a letter of October 25, 2021, according to Daily Trust.
More heads to roll
Economy Post was told that a lot of individuals and entities would be prosecuted or punished in the three banks, including ex-directors who were found to have contributed to the infractions.
Recommendations have been made regarding loans, illegal transactions, insider dealings and other levels of infractions committed by certain individuals and entities, Economy Post understands.
Rot in banking system
Economy Post has reported extensively on the rot in the Nigerian banking system, including granting of loans to related parties or directors without due process.
It reported in October 2023 how Polaris Bank lost N26 billion loan granted to 6 ex-directors without collaterals.