CBN Sacks Boards Of Union, Keystone, Polaris Banks Over Non-Compliance With Financial Acts

Following the dissolution of the management and boards of three commercial banks by the Central Bank of Nigeria (CBN) on Wednesday, the federal government has taken over Union, Polaris and Keystone banks.

The action, according to a statement signed by the Acting Director of corporate Communications, Hakama Sidi Ali, became necessary due to “non-compliance of these banks and their respective boards with provisions of sections 12(c), (f), (g) and (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 the financial stability among others,” the apex bank said.

The CBN is expected to communicate the decision to the banks today while interim management and boards are expected to be announced straightaway to prevent a vacuum in the system. A source said the lists were being finalised last night.

The banks, according to a report of Jim Obazee, the Special Investigator appointed to probe the apex bank, were allegedly acquired by or through the connivance of the former governor of the regulatory body, Godwin Emefiele.

But some sources privy to the processes leading to the decision said the action was taken in the best interest of the industry and that it would put paid to speculation on the future of the affected banks, reposition them and restore corporate governance, which had been totally eroded.

The takeover followed a marathon meeting of the Committee of Governors (CoG), which included the governor of the CBN, Yemi Cardoso and his deputies. Obazee and his team were also at the meeting.

The Central Bank was said to have gone the extra mile in securing the approval of President Bola Tinubu, even though it has the power under BOFIA to dissolve the managements/or board of any financial institution where there is corporate governance failure.

The request, it was informed, was granted speedily by the President yesterday before the meeting ended at 5pm. Reports and speculations about the decision sent shockwaves through the financial system, especially the affected banks and entities directly related to them.

As at 8pm on Wednesday, management of the affected banks who were at their office awaiting the official communications were in a panic mood and contemplating the impact of the decisions.

A top executive in one of the banks told our correspondent that they were earnestly awaiting the official communication and directive as “everything was still speculative”.

But a source who was privy to details of the meeting said the decision was a matter of “finality” on the fate of the former boards as the process of takeover had been in the pipeline for over a week.

“The CBN is not required to secure approval from the President. But the current management, because it is determined to follow due process, had to get approval. That is also because there is no full board now. Ordinarily, the decision of the CoG should have been taken to the board for approval,” the source explained