The Central Bank of Nigeria CBN has, with immediate effect, sacked the entire Board of Directors of Polaris, Titan, Union and Keystone Banks.
This action, according to a press release signed by Mrs. Hakama Sidi-Ali, Acting Director, Corporate Communications, was necessitated by the “non-compliance of these banks and their respective boards with the provisions of Section 12(c), (f), (g), (h) of Banks and Other Financial Institutions Act, 2020.”
The press release further details the banks’ infractions, stating they range 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.”
The specific details of the banks’ non-compliance remain unclear, but the potential implications are concerning. Regulatory non-compliance could involve issues like capital adequacy ratios, loan-to-deposit ratios, or risk management practices falling below regulatory standards.
Corporate governance failures could encompass mismanagement of funds, conflicts of interest, or lack of transparency. Disregarding licensing conditions could involve exceeding authorized activities or operating outside permitted geographical areas. And involvement in activities that pose a threat to financial stability could encompass anything from reckless lending practices to money laundering or even outright fraud.
Provisions of Section 12(c), (f), (g), and (h) of the Banks and Other Financial Institutions Act, 2020.
Section 12(c). Prohibits directors, managers, and officers of banks from having personal interest in any advance, loan, or credit facility granted by the bank. They must declare any such interest to the bank. Additionally, they are prohibited from granting loans or credit facilities without authorization and proper security as per the bank’s rules and regulations. Violating this section is an offense punishable by a fine of ₦100,000 or imprisonment for 3 years, and any gains or benefits gained through such contravention will be forfeited to the Federal Government.
Section 12(f): Requires banks to comply with all applicable laws, regulations, and directives issued by the CBN. Failure to comply with this section can result in regulatory sanctions, including fines, limitations on operations, or even revocation of the bank’s license.