CBN plans shareholders summit, compiles new directors’ lists

Indications have emerged that the Central Bank of Nigeria leadership will hold meetings with the shareholders of Union Bank of Nigeria, Polaris Bank and Keystone Bank this weekend or early next week as a follow-up to the sack of the boards of directors of the three banks.

The CBN had on Wednesday fired the boards of the banks, citing corporate governance failure and non-compliance with regulatory requirements, among others, as reasons.

The move marked a major milestone in the implementation of the report of the Special Investigator on the CBN and Related Entities, Mr Jim Obazee. The report was submitted to President Bola Tinubu on December 20, 2023.

However, barely 24 hours after the CBN sacked the boards of Union, Polaris and Keystone banks, PUNCH findings have shown that the leadership of the apex bank will meet shareholders of the affected lenders.

Multiple sources close to the CBN and the special investigator said it could be held as early as this weekend or early next week.

A source close to the special investigator, who spoke with The PUNCH on condition of anonymity because he was not authorised to speak on the matter, however, declined to comment on the specific agenda of the meeting.

‘’The team of the special investigator and that of the CBN will meet with the shareholders of the banks for further discussions,’’ the source said without elaborating further.

The acting CBN Director, Corporate Communications, Sidi Hakama, had on Wednesday in a statement alleged that Union Bank, Polaris Bank and Keystone Bank were guilty of issues it said posed a threat to the financial stability of the banking sector.

The CBN statement read in part, “The Central Bank of Nigeria has dissolved the boards and managements of Union Bank, Keystone Bank, and Polaris Bank.

“This action became necessary due to the non-compliance of these banks and their respective boards with the provisions of Section 12(c), (f), (g), (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 financial stability, among others.”

Following the development, the CBN in the early hours of Thursday announced some members of interim managements for the three banks.

For Union Bank, Yetunde Oni was named the managing director while Mannir Ubali Ringim emerged an executive director. For the interim management team of Keystone, Hassan Imam was named the managing director while Chioma Mang was appointed an executive director.

For Polaris Bank, Lawal Mudathir Omokayode Akintola was named the managing director while Chris Onyeka Ofikulu is an executive director.

According to the CBN, their appointment takes immediate effect and they are to oversee the affairs of the three banks whose boards and management were dissolved on Wednesday after a meeting involving the CBN Special Investigator, Obazee, and the CBN Governor, Olayemi Cardoso.

Meanwhile, findings by The PUNCH show the apex may soon name other members of the boards of the affected banks.

According to CBN officials, the constitution of a complete board and management team for the lenders requires more than just a managing director and one ED.

As a result, they said an announcement of other board members for the three banks might be done very soon.

One of the CBN officials, who spoke to one of our correspondents on condition of anonymity because he was not authorised to speak on the matter, said, “The managing director and one ED do not make up the board and management team of any bank. So, we are expecting that another announcement will be made soon.”

While the option of nationalisation exists, the officials expressed reservation about the government opting for such a move,

They said the government might entrust the banks to the interim management teams tasked with resolving issues in the banks within a timeframe of three to six months before possibly putting the banks up for sale.

 “Nationalising those banks can happen but I don’t think the government will want to play in that field for now. I think the government will hand them over to an interim management team to put things right within three to six months and put the banks up for sale,” an official said

“And remember recapitalisation is about to happen so they’ll just leave things the way they are. These people are just going to manage the banks, for now, to give the depositors assurance that their money is safe, manage staff relations and all that for the banks. Later, some banks or individuals may show interest in either buying up the banks or merging them with other banks. That is the likely scenario,” the source added.

Union Bank reacts

Meanwhile, the Union Bank of Nigeria has assured its customers on the safety of customers’ funds.

An e-mail notice shared with its customers read, “As you may already know, CBN, in its efforts to ensure a stable and effective banking sector, has dissolved the Board of Union Bank of Nigeria and appointed new executives to oversee its operations.

“We want to assure you that your accounts and funds are safe with the bank. Union Bank remains committed to serving our valued customers, and your financial well-being is our priority.

“Your trust in Union Bank is important to us, and we will continue to operate with the same dedication to transparency, integrity, and customer satisfaction with which we have served our customers for 106 years.”

Meanwhile, visits by The PUNCH to some of the bank’s branches in Lagos showed that operations went on as usual.

Normal operations continued at the branches of Union Bank of Nigeria, Polaris Bank and Keystone Bank, hours after the dissolution of the board of the banks by the apex bank.

A Polaris Bank customer at the 200 Road, Festac branch in Lagos wasn’t even aware of the dissolution of the board.

At the Union Bank branch in Maza-Maza along the Lagos-Badagry Expressway, activities were undisrupted, same as the branch at Oshodi Express.

Also, when The PUNCH also visited a Union Bank along Ikotun-Idimu road, it was observed that normal banking activities were ongoing as the crowd at the bank was not much.

The bank customer who did not want his name in prints said he came make use of the ATM.

“Well, I didn’t notice anything in their operation, I only came here to use their ATM,” he said.

Speaking with The PUNCH, in an exclusive interview, the President of the Association of Senior Staff of Banks, Insurance and Financial Institutions, Olusoji Oluwole, said, “For us, the Central Bank of Nigeria has exercised its regulatory powers in deciding as you know they cited the violations of some of the acts of the banks and other financial institutions.”

“Nevertheless, what has happened, we don’t envisage any major impact on the running of the organisations. Like they always said, the banking institutions remain strong, and we can assure you that these institutions also remain strong.”

He added, “When we look at the people who have been appointed to lead, they are seasoned bankers who have had experiences running into decades in different institutions, and we believe that they can lead these banks to the next level that is desired for the investors and the regulator.”

He further explained that it was the boards that had been removed and not the entire workforce, noting that the growth of an institution and sustenance is anchored on the activities of the workforce.

“We trust that these workforces majorly made up of our members would continue to put in their best and focus on the growth of their institutions and the development of the economy of the nation,” Oluwole added.

Experts speak

Also reacting, the Group Managing Director, Cowry Asset Management Limited, Johnson Chukwu, said, “In terms of investors’ confidence, I don’t think it will be affected. If the banks were acquired with illicit funds, then I don’t see how the investors would say that the government should have allowed it to be sustained.”

On Keystone and Polaris banks, Chukwu said, “Operators in the industry were quite suspicious that some underground arrangements were put in place. So, it didn’t come as a surprise to any of them when the report of the special investigator came out. And if that report is accepted by any government, the actions were not unexpected, I mean a reversal of the transactions because it was not an arm’s length transaction.”

About depositors’ concerns for their funds, Chukwu said, “I don’t think the CBN’s action will in any way affect the depositors’ money in the banks. It will not affect the banks’ capacity to meet their obligations.”

Also speaking on the development, the Vice President of Highcap Securities, David Adonri, said that the apex bank’s move would boost depositors’ confidence as well as that of investors.

A stockbroker, Ambrose Omorude, in a chat with one our correspondents, said, “The financial sector is crucial to the economy and the way this one has been managed is fine with me. The CBN highlighted some sections of the BOFIA which were breached by the affected banks. It is good that an acting MD and one director has been appointed.

Meanwhile, the apex bank assured the public of the safety and security of depositors’ funds while saying it remains resolute in fulfilling its mandate to uphold a safe, sound, and robust financial system in the country, adding that “our banking system remains strong and resilient.”

Meanwhile, the National Coordination of the Independent Shareholders Association of Nigeria, Moses Igbrude, has challenged the deductions made by Asset Management Corporation of Nigeria in light of capital adequacy concerns in some banks.

Igbrude in an exclusive chat with The PUNCH, challenged the deductions of AMCON if banks taken over by them still had such issues.

He said, “First, we must identify the issues going on. The issues involved are not related to operations but ownership. These banks were once owned by shareholders before the CBN came in.

“Capital adequacy was one of the reasons they took over some banks years back. If that was the reason then, why should it be a reason now? They should have asked the owners to recapitalise the banks.  What is AMCON doing? They should return the banks to the owners if capital adequacy has not been addressed since the government took over the banks several years ago and give us time to recapitalise.

“Don’t forget that because of this issue, AMCON is still deducting some percentage of the balance sheet of healthy banks. What are they doing with the money?”

AMCON, which was introduced in 2011, to recover the bad loans in the banking system charges 0.5 per cent of every bank’s total assets, including off-balance sheet assets.

Meanwhile, the National Co-coordinator of the Independent Progressive Shareholders Association of Nigeria, Tony Omojola, called for careful management of the situation to avoid any form of escalation.