CBN sacks boards of three Nigerian banks weeks after special investigation

by MMC
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THE Central Bank of Nigeria (CBN) has sacked the board of directors of three banks, Keystone Bank, Polaris Bank and Union Bank, at a meeting in Abuja, the national capital. A senior CBN official confirmed the development to TechCabal. According to the CBN, the affected banks committed offenses ranging from “failure to comply with regulations to failure of corporate governance”. The apex bank said it was also involved in activities threatening its financial stability.

A CBN statement signed by its Director of Corporate Communications claims that the dissolution of the boards of directors of the affected banks “became necessary due to the non-compliance by these banks and their respective boards of directors with the provisions of the Section 12(c) (f), (g), (h) of the Banks and Other Financial Institutions Act, 2020.

The dissolution of the boards comes weeks after Jim Obazee was appointed special investigator to probe the activities of the Central Bank under outgoing Governor Godwin Emefiele. Obazee’s report claimed that Emefiele used proxies to acquire Union Bank of Nigeria for Titan Trust Bank Limited.

Special investigator’s report

Jim Obazee’s report alleges that Emefiele’s proxies also acquired Keystone Bank and Polaris Bank without any proof of payment. According to the report, Emefiele roped in two Dubai-based companies, Luxis International DMCC and Magna International DMCC, to set up Titan Bank. According to Section 3(5) of the Banks and Other Financial Institutions Act, the two companies are not legally authorized to operate or acquire a bank in Nigeria.

After the establishment of Titan Bank, the bank sought approval from the CBN in 2021 for its proposed consolidation with Union Bank by acquiring 91.5% of Union Bank’s shares and a possible merger between the two banks. By 2022, Titan Bank had acquired 93.4% of Union Bank’s shares. According to the report, Keystone Bank was acquired by a special purpose vehicle led by Isa Funtua and Emefiele and was financed with a N25 billion loan from Heritage Bank.

The report also stated that the federal government purchased the four banks due to the “illegality” of the transaction.

“We have completed our investigation into this acquisition and are in the process of recovering these two banks for the federal government,” a special investigator’s report said in December.

*This is a developing story

*An earlier version of this story stated that Titan Bank was one of the affected banks. A recent communication from the CBN suggests that Titan Bank has not been affected.

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