The Central Bank of Nigeria (CBN) has taken a decisive step by dissolving the boards of Union Bank of Nigeria, Keystone Bank, and Polaris Bank, citing multiple infractions that threatened financial stability. The action, as stated by the CBN, became necessary due to non-compliance with specific sections of the Banks and Other Financial Institutions Act, 2020.
In an official statement signed by the acting Director of Corporate Communications, Sidi Hakama, the apex bank outlined the various infractions committed by the affected banks and their boards. The violations include regulatory non-compliance, corporate governance failure, disregard for the conditions under which their licenses were granted, and engagement in activities deemed a threat to financial stability.
The statement reassured the public about the safety and security of depositors’ funds, emphasizing the CBN’s commitment to maintaining a safe, sound, and robust financial system in Nigeria. The CBN stated, “Our banking system remains strong and resilient.”
The dissolution of the boards aligns with Section 12 of the Banks and Other Financial Institutions Act, 2020, as quoted by the CBN. The relevant sections include:
– Section 12(1)(c): Failure to fulfill or comply with any condition subject to which the license was granted.
– Section 12(1)(f): Involvement in a situation, circumstance, action, or inaction that constitutes a threat to financial stability.
– Section 12(1)(g): Failure to comply with any obligation imposed by the Act, the Central Bank of Nigeria Act, or any other rule, regulation, guideline, or directive.
– Section 12(1)(h): Being critically undercapitalized with a capital adequacy ratio below the prudential minimum or any other ratio as prescribed by the CBN.
The dissolution follows recent claims by Jim Obazee, the Special Investigator of the CBN, who alleged that some banks were acquired by a former CBN governor, Godwin Emefiele, using proxies. The recommendation was made for the federal government to take over the banks, strengthen them, and subsequently sell them off. The CBN’s move to dissolve the boards aligns with its commitment to maintaining the stability and integrity of the nation’s financial system.
