By Ademola Oyetunji
The banking sector was thrown into a frenzy Wednesday afternoon with the dissolution of the boards of three commercial banks, Keystone, Polaris, and Union Bank. This was expected, regardless of the clean bill verdict passed on the banks by the Central Bank of Nigeria.
The Governor of the Central Bank of Nigeria, Olayemi Cardoso had at his maiden address at the CIBN annual dinner last year said “Nigeria’s financial sector has demonstrated resilience in 2023, with key indicators of financial soundness largely meeting regulatory benchmarks. Stress tests conducted on the banking industry also indicate its strength under mild-to-moderate scenarios of sustained economic and financial stress, although there is room for further strengthening and enhancing resilience to shocks”. Cardoso said, “Looking ahead for the industry, banks should reassess the responsible banking framework to ensure that the requirements are effectively integrated into strategies”. Some banks he continued have made commendable progress, and for those in the process, the CBN is taking steps to enhance its in-house capacity to assist them.
It may also have signaled President Tinubu’s decision to clean the entire financial system after the tumultuous tenure and sack of the Bank’s former governor.
The President has never hidden his disdain for Godwin Emefiele led-CBN. Before, and after his inauguration, he loudly expressed his planned reformation of the Bank. He appointed a special investigator, Jim Obazee to carry out a forensic investigation and audit of the tenure of Godwin Emefiele at the CBN, and other related agencies. Snippets coming out from the investigative exercise are damning. This is so as the investigator had announced his submission of the report to the President, recent developments point to a full-blown financial system reform.
Therefore, CBN Governor’s announcement of the dissolution and appointment of new executives to run the affairs of the affected banks may be the commencement of the implementation of the report. Yetunde Oni was appointed the Managing Director for Union Bank, and Mannir U. Ringim, an Executive Director. Hassan Imam was appointed the Managing Director, Keystone and Chioma A. Mang, Executive Director, and Lawal M. Omokayode, and Chris Onyeka Ofikulu were appointed as Managing Director and Executive Director for Polaris Bank. A clean up of the Augean’s stable.
Developments heralding this decision may have triggered the action of the Bank. It was alleged that some executives of one of the banks were not cooperating with the investigator. It was also discovered during investigation that the former Governor of the Bank, Godwin Emefiele through proxy acquired one of the banks which was not paid for. He also used cronies to acquire others. Cardoso may have also received presidential approval for the CBN action.
The CBN alleged that “the banks’ 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”. It however promised the public of the safety and security of depositors’ funds as it remains resolute to fulfil its mandate to uphold a safe, sound, and robust financial system.
Contained in the Special Investigator’s report were secured documents pointing to Godwin Emefiele as the buyer of Titan Trust Bank and Union Banks with his ill-gotten wealth. He also used proxies to acquire Keystone Bank without evidence of payment. A glaring abuse of trust and corporate governance.
The decision of the CBN has been widely commended, particularly with immediate replacement of the sacked chief executives of the banks. A move that some high-net-worth stakeholders have lauded to avert any crisis of confidence within the affected banks.
Mr. Adewale Aderounmu, an industrialist, and former bank chief executive commended the CBN under Mr. Olayemi Cardodo thus far for his silent, but potent policies that have begun to yield visible results. This, he said, is despite detractors’ antics, who daily attack the Naira, and manipulate the foreign exchange market. He said it was gladdening the special investigation team of Jim Obazee uncovered the irregularities in the acquisition of the banks.
Ayomide Deepak, an Abuja based stockbroker, welcomed the action. He was shocked with revelations coming out from the 9-year tenure of Godwin Emefiele at the apex bank. He advised the CBN helmsman to remain focused to enable him to achieve what he promised to do at the Bank, restoring the trust of Nigerians in the CBN. He said Nigerians totally lost trust in the Bank when it redesigned the currency and caused them pains.
Deepak urged the government and the CBN to thread with caution and be objective in handling revelations from the investigation so as not to cause problem within the industry. This action is already a bad signal in a struggling economy, problem in the banking sector may spell doom for the economy, he urged.
As the CBN big hammer fell on these banks, it is hoped that other bank chief executives and investors will learn a good lesson for the sake of the economy. The CBN’s action was all about the economy and the financial system not at all a vendetta.
Ademola Oyetunji writes from Ibadan.
