Stanbic IBTC risks losing N268bn, $4.5m in litigations as bank highlights 12-year-old court case against AMCON

STANBIC IBTC has explained its 12-year-old case against the Asset Management Corporation of Nigeria (AMCON) but the lender risks losing N268.274 billion, $4.4 million and £74,284.64 in various litigations instituted against it.

In the first quarter (Q1) 2024 financial statement released by the bank to the Nigerian Exchange Limited in late April 2024, the tier-2 lender gave details of its 12-year-old court case with AMCON, which had continued at least till late April 2024.

Stanbic IBTC said it had, in December 2012, entered into an agreement with AMCON to purchase the eligible assets (non-performing loan) of a client, which it had classified as “doubtful.” It said AMCON confirmed its willingness to purchase the proposed assets at a total consideration of about N10 billion, whose sale/purchase was concluded in December of 2012.

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“As a precondition for the sale, AMCON unequivocally stated that the pricing of the Eligible Bank Assets was subject to adjustment within twelve (12) months in line with AMCON guidelines after due diligence on information the Bank had supplied to AMCON.

“AMCON by a letter dated October 4, 2017 informed the Bank of its intention to reprice the loan and claw back the sum of N5.7bn, being what was alleged to be excess overpaid consideration, as a result of what was felt was an overvaluation.”

The bank said it denied the allegations and provided evidence to AMCON to the contrary, stressing that AMCON’s attempt to reprice the sold assets was outside the 12-month claw-back period provided in AMCON guidelines.

“Notwithstanding all the clarifications made by the bank, AMCON proceeded to apply to the Central Bank of Nigeria (CBN) to debit the Bank’s account with the sum requested to be clawed back, plus possible accrued interest,” Stanbic IBTC said.

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The tier-2 lender said sequel to this, the CBN “wrote to Stanbic IBTC on 31 July 2019, informing the Bank of AMCON’s request to debit the Bank’s account. Accordingly, the Bank instructed its lawyers to institute a Legal action against AMCON, pursuant to which it obtained an interim injunction (ex-parte), restraining AMCON and the CBN from debiting its Account for the alleged claw-back sum.”

The bank said it subsequently discovered that AMCON had earlier filed a suit at the Federal High Court, Lagos, on the same subject matter. Consequently, it discontinued its suit against AMCON and filed a counter-claim against the institution. The case was adjourned to April 29, 2024, for settlement of issues.

AMCON is Nigeria’s bad bank. It was created as a “key stabilising and re-vitalising tool established to revive the financial system by efficiently resolving the non-performing loan assets of the banks in the Nigerian economy.”

Other litigations

Stanbic IBTC further noted that in the ordinary course of business, its group was exposed to various actual and potential claims, lawsuits and other proceedings relating to alleged errors, omissions, and breaches.

It said however said the group had adequate insurance cover and / or provisions
in place to meet such claims – though the likelihood of success was low.

“The Group litigation portfolio as at 31 March 2024 consisted of 415 cases and aggregate value of monetary claims against the Stanbic IBTC Group was N268,273,907,895.42 USD$4,468,675.78 & GB £74,284.64,” the bank said.

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The group said claims against it were generally considered to have low likelihood of success and it was actively defending same.

“Management believes that the ultimate resolution of any of the proceedings will not have a significantly adverse effect on the group. Where the group envisages that there is a more than average chance that a claim against it will succeed, adequate provisions are raised in respect of such claim.”

Yakubu Ibrahim
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