THE Central Bank of Nigeria (CBN) may soon name other members of the boards of three banks whose board of directors and top management were affected by the recent regulatory action.
According to CBN officials, the constitution of a complete board and management team for the lenders requires more than just a managing director and one Executive Director (ED).
As a result, they said an announcement of other board members for the three banks might be made very soon.
This is just as signals have become clear that the Central Bank of Nigeria leadership will hold meetings with the shareholders of Union Bank of Nigeria, Polaris Bank and Keystone Bank this week as a follow-up to the changes in the boards of directors of the three banks.
The CBN had, on Wednesday last week, removed the boards of the banks, citing corporate governance failure and non-compliance with regulatory requirements, among others, as reasons.
The move marked a major milestone in the implementation of the report of the Special Investigator on the CBN and Related Entities, Mr Jim Obazee. The report was submitted to President Bola Tinubu on December 20, 2023.
According to industry stakeholders, it would appear the decision of the apex bank was based on Jim Obazee report. They raised concerns that the ambiguous references to sections of Banks and Other Financial Institutions Act (BOFIA) that empowers the CBN and the consequence management of non compliance without specific details of the infractions is indeed worrisome.
“Could it be that CBN is avoiding the risk of indicting its directorates by being evasive on the details of the issues? “Because it questions the supervision of these banks since the exceptions were not flagged until the private investigator was contracted, “ a source who prefers anonymity stated.
“The team of the special investigator and that of the CBN will meet with the shareholders of the banks for further discussions,’’ the source said without elaborating further.
In their analysis of the situation, Proshare Research analysts observed that there are serious issues around the legality of, and governance gaps in the decision taken by CBN.
“In a report to be released that looks at the evidence, including letters from the CBN to the bank on routine issues, we have sought legal opinion on the relevance of the section 12 cited by the CBN and do not see the sufficient basis to use a section for revocation of licences to deal with removal of boards/directors.
“We have also imagined a report on the transaction approved by CBN for which it received consideration and identified that nothing in the CBN Act and BOFIA justifies this action, “ the analysts stated.
The research team further pointed out that “the memo will say that we could not find such unique evidence that justifies an action under the CBN Act and BOFIA to take such an action when the banks were not in any grave danger, nor were there threats of depositors losing funds.”
The CBN, according to Proshare, needs to be properly advised of this action and will benefit from a decision matrix analysis which it will present to the public, adding that the provisions of s12 cover other banks left untouched, which is highlighted in the memo to the market.
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