The Central Bank of Nigeria’s abrupt removal of Union, Keystone and Polaris banks’ boards, coupled with the installation of their chosen teams due to alleged non-payment issues and connections to prominent public figures, has left many Nigerians with unanswered questions and prompted a flurry of allegations as they seek to understand the decisions.
The public is puzzled by the Central Bank’s assertion that the banks were acquired through unclear processes. This raises questions as the acquisitions of Keystone and Polaris Banks from CBN and AMCON were carried out by local investors through documented processes. Similarly, Union Bank’s acquisition by foreign investors had available records, with major acquisitions approved by the CBN. These established processes and documented transactions offer avenues for verification, emphasising the importance of relying on accurate information when evaluating the situations surrounding these banks.
The absence of written notice to the boards before the Central Bank’s unilateral dissolution raises transparency and procedural questions. This improper communication contradicts Section 36 of the Nigerian Constitution, guaranteeing a fair hearing. The discrepancy underscores the need for scrutiny and clarification regarding the legal justification behind the CBN’s decisions.
Concerns arise over the perceived deviation from CBN’s laws and established practices, potentially compromising fairness and transparency in regulatory processes. The lapse in adhering to standard procedures underscores the necessity for a comprehensive examination of the CBN’s actions and their alignment with legal frameworks.
The exclusion of banks’ shareholders from discussions leading to the boards’ dissolution and the CBN’s failure to provide a formal explanation through a letter is a cause for concern. Shareholders learned about the decision through media and social platforms, circumventing official channels.
The lack of direct communication erodes transparency and engagement principles, leaving stakeholders uninformed and detached from pivotal decisions affecting their interests. This highlights the importance of establishing clear and direct communication channels to uphold principles that promote openness and meaningful engagement in significant matters.
Shareholders expressing concerns about the breach of fair hearing provisions in the Banks and Other Financial Institutions Act 2020 have seemingly gone unheard. The CBN’s utilisation of Section 12 of BOFIA implies a preconceived decision to revoke licenses without involving shareholders in a meaningful discussion regarding alleged non-compliance.
This raises significant concerns about observed due process, emphasising the need for a thorough examination of the CBN’s actions to ensure compliance with legal frameworks and fairness principles in regulatory interventions.
The CBN’s defence of its intervention, citing corporate governance lapses and regulatory non-compliance, lacks substantial support due to the rushed nature and absence of a fair hearing in their actions against the banks. This hasty and seemingly arbitrary approach creates uncertainty, fostering doubt and speculation. The lack of proper justification raises questions about the fairness and adherence to due process by the CBN in making this consequential decision.
Despite the CBN’s defence, the suddenness of its actions and the absence of transparency give rise to concerns about potential hidden motives and political influences, particularly regarding Nigerian banks’ associations with specific regions. This polarising perception poses a risk to the constitutional rights of shareholders and threatens public trust in the financial system. Upholding transparency and avoiding any appearance of political influence is crucial for preserving the stability and effectiveness of the financial sector, which relies on trust for economic growth, deposit mobilisation, extending loans to MSMEs, and overall prudent functioning.
In summary, the CBN should avoid seizing banks based on unverified allegations to prevent unjust regulatory actions. This is crucial to avoid negative repercussions on both local and foreign investors, potentially impacting Nigeria’s ability to attract international investments. Upholding transparency and following due process is paramount for Christmas fostering a favorable investment climate and building trust in the regulatory landscape. Nigerians are closely observing these developments.
Usman is a lecturer and public policy analyst based in Abuja
