In days
of yore, the African traditional belief accepted the concept of reincarnation.
The Yorubas of South-west Nigeria in their mythology comprehended the
manifestation of ‘Abiku’ (still born). Abiku are children who died
suddenly, mysteriously and prematurely but were reputed to have power to come
to life again to their parents through repeated births.
To make
an Abiku leave or ward him off permanently, parents used to consult powerful
herbalists to break the jinx of their repeated births and deaths. Sometimes,
parents would perform horrible sacrifices such as placing hot metals to
inscribe scars on the Abiku or tying bangles around their neck and legs before
burial. Often times, the Abiku defied all these, including divinations and
charms of herbalists and would still return to the same parents even with the
scars.
This
nature of Abiku soon gave rise to an adage: Abiku s’ologun de’ke, which
literally translates as the still-born that defies the power of herbalist. Most
herbalists therefore resorted to staying-off the Abiku in order to preserve
their integrity.
To
demonstrate the vanity in any efforts at breaking the Abiku jinx, Nobel Laurel,
Prof. Wole Soyinka wrote of the boast of an Abiku in a poem titled Abiku: ‘’In
vain your bangles cast; charmed circles at my feet; I am Abiku, calling for the
first and repeated times......’’ To this end, the question in every boy’s
mind has been; who will confront and conquer Abiku?. Your guess is as good as
mine.
However,
the myth about the Abiku and herbalists is fast becoming the metaphor of the
Savannah Bank of Nigeria Plc (SBN) and Societe General Bank of Nigeria Limited
(SGBN) to Central Bank of Nigeria (CBN).Undoubtedly, the case of the SBN and
SGBN appears to be an albatross to the regulatory authorities. As it is today,
it seems the CBN has adopted a ‘’siddon’’ look attitude or has lost powers to
make banks live by resolving their distress status or pronounce their death
through revocation of failed banks licences to the ‘’Abiku’’ SBN and SGBN.
What
the Law Says
The CBN
is the only body in Nigeria conferred with statutory powers not only to issue
operating licences to banks, but also to revoke such licences.
The CBN
derives its powers to revoke banking licence from sections 12 and 36 of the
Banks and other Financial Institutions Act ( BOFIA), 1991 (as amended); the
statute enacted to specifically govern banking operations, supervision and
resolution in Nigeria. These powers flow from its mandate to promote sound and
stable financial system in Nigeria as contained in section 2 (d) of the CBN Act
2007 (as amended).
Also,
the Companies and Allied Matters Act (CAMA), 1990 and the Nigeria Deposit
Insurance Corporation (NDIC) Act No 16 of 2006 provide, amongst other laws
govern the winding up of the affairs of insured banks and other deposit-taking
financial institutions in Nigeria be they deposit money banks(DMBs), microfinance
banks(MFBs) or primary mortgage institutions(PMIs). To banks in Nigeria, CBN is
the giver and taker of life.
The
Road to Closure:
In the
case of the two Abiku banks, SBN had its operating licence revoked by the CBN
on February 15, 2002 over alleged grave financial condition of the bank which
culminated in the total erosion of its capital base resulting in insufficient
assets to meet its liabilities. The bank was also alleged to have failed to
comply with the obligations imposed by CBN. On the other hand, SGBN’s operating
licence was withdrawn in January 2006 following its suspension from the
clearing house two years earlier.
However,
seven years after the revocation of SBN’s licence, precisely on 5th February,
2009, the Court of Appeal, Abuja presided over by Justice U. M. Abba’aji
ordered that the licence be restored to the bank when the bank successfully
canvassed that the CBN prematurely revoked its operating license.
The
Court of Appeal proceeded to prescribe six months within which SBN should
capitalise. The Court’s deadline expired in July 2009. On April 2, 2008,
SGBN also had its licence restored back on the order of the Federal High Court
sitting in Abuja, presided over by Justice Binta Murtala-Nyako when it argued
that the revocation of its (the SGBN) operating licence was done in bad faith.
Like in the case of SBN, the Court gave SGBN 30 days within which to return to
operations.
The CBN
declined to challenge the decisions of the two courts.Despite the palliative
measures and olive branch extended to the failing banks to resuscitate their
operations, the owners have since then been reluctant to empathise with the
teaming depositors whose funds were trapped in the two banks. The major
reason for the inability to re-launch their status is that they are both
insolvent and grossly undercapitalised.
What
Went Wrong?
To
borrow from the famous poser of the CBN Governor, Malam Sanusi Lamido Sanusi,
at the 2010 Convocation lecture of the Ahmadu Bello University (ABU) Zaria with
the theme: “The Nigerian Banking Industry: What went Wrong and the Way
forward”, what went wrong in the revocation of the banking licences of the two
banks? How could a dead bank rise? The answer lies in the fact that
though the CBN has the right to give life to a bank and take it away, that
power has been made subject to judicial review.
That
innocuous proviso which was inserted in section 49 (1,) which ironically was to
protect the CBN and its officers from adverse claims or liability arising from
litigation also ensures that CBN’S action were carried out in good faith. The
section empowers shareholders of banks to challenge the revocation of the
operating licences of their banks with the sole aim of proving that there was
bad faith in their revocation. So far, the two banks have successfully invoked
the section and are now successfully the living dead (Abiku) banks.
What is
then the fate of the depositors in these debacles?. NDIC Act can only provide
the solution if the owners of these failed banks agree to throw-in the towel
rather than wait endlessly for injection of fresh funds by the shareholders.
Aftermath
of the Revocation of Licences of SBN and SGBN:
Besides
the myth of Abiku and except for Jesus Christ and Lazarus as espoused in
biblical teachings, when a person dies, he stays dead. It is also expected that
when the CBN declares a bank failed and revokes its operating licence, the bank
stays dead. It will now be the responsibility of the mourners, among whom would
be the depositors of the bank, creditors, shareholders, management and staff of
the bank, led by the Liquidator-in-Charge i.e. Nigeria Deposit Insurance
Corporation (NDIC), to ensure that the bank is given a befitting burial.
However,
the situation in Nigeria is such that the banks’ throes of death sometimes lead
to their resurrection in the same manner as the Abiku. Unlike the biblical
accounts of those who survived death, the two entities (SBN and SGBN) which
rose from revocation of their operating licences are yet to open their doors
three years after the epoch judicial decisions.
Where
Do We Go from Here?
The
consequences of the inertia on the part of the Shareholders of the two banks to
recapitalise them and put them back on stream on the one hand and the
reluctance of the regulatory bodies, particularly the CBN to take a decisive
action to resolve the crisis in the two banks is causing an unwarranted distortion
and name calling in the banking system. My findings show that with the
restoration of the two banks (SBN and SGBN) licences, the matter had been taken
out of the jurisdiction of the NDIC in whom the depositors would have found
solace. Thus, it is only the CBN that can wipe the tears off the faces of the
hapless depositors by acting decisively on the logjam. The promoters of the
banks have continuously trampled upon the rights of the depositors who deserve
to be protected by the law more than the shareholders who were actively
involved in the collapse of the two banks.
The
most unfortunate aspect of this drama is the wanton disregard of the rights of
the depositors who have been deprived of their hard earned deposits which had
been trapped in the SBN and SGBN for ten years and six years
respectively.
It is
very hard to imagine how these teeming depositors would stand-by and watch
endlessly without seeking redress from the same courts which restored the
licences of the two banks.At the moment, it is a case of a camel passing
through the needle’s eye for the CBN to absolve itself of blame in this
quagmire.
For
instance, while the judgement of the Court of Appeal delivered on 5th February,
2009 ordered the restoration of the operating licence of SBN, the court went
ahead to make a consequential order, directing the CBN to give the SBN up to
six months as per its (the CBN) circular to all banks just about a month before
the revocation of SBN licence on February 15, 2002.
The CBN
circular being referred to by the court was issued on January 10, 2002, which
gave a six-month deadline (i. e. January 10 – July 1, 2002) to all banks to
re-capitalise, failing which appropriate supervisory intervention would be
applied. The Court’s deadline had expired since September 2009. In the case of
SGBN, the court equally gave a 30-day deadline within which to resume
operations which had since expired.
The
intransigence by the CBN is therefore to blame for the present predicament.In
clear terms, the CBN does not owe the shareholders any duty to allow dead banks
to live. Rather, it has a duty to alleviate the sufferings of the depositors of
the SBN and SGBN by diligently and fearlessly exercising its power to send the
two Abiku banks back to their graves in the interest of the hapless
depositors.
Suffice
it to say that the shareholders had recouped their investments long before
running the banks aground through various insider abuses and other corporate
governance infractions. Therefore, it is left to the CBN to take the path of
honour by revoking the operating licences of the two banks in order to give way
to the NDIC to commence the process of discharging its mandate of depositors’
reimbursement.
Written
By Rasheed Abdullahi-Alli
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