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President Bola Tinubu has taken action to implement the recommendations of the special investigation conducted by Jim Obazee on the Central Bank of Nigeria (CBN). As a result, the CBN Governor, Olayemi Cardoso, has dissolved the boards and managements of three banks – Union Bank, Keystone Bank, and Polaris Bank – that were implicated in the investigation. The banks were acquired through questionable transactions, according to the probe panel.
The CBN cited non-compliance with the provisions of the Banks and Other Financial Institutions Act, 2020, as the reason for the dissolution. It also accused the banks of infractions such as regulatory non-compliance and corporate governance failure.
No specific details were provided regarding the offenses committed. The move by the CBN has caused concerns among industry analysts, who fear it may dampen banks’ ability to raise capital ahead of the recapitalization process announced by the CBN. They suggest that the CBN needs to provide more clarity on its decision to dissolve the boards and management of the banks in order to maintain investor confidence and interest in Nigerian banks.
The special investigation conducted by Jim Obazee alleged that former CBN Governor Godwin Emefiele, some banks, and other private entities were involved in corrupt practices. The report claimed that Emefiele birthed Titan Trust Bank (TTB) to acquire Union Bank of Nigeria using proxies and without evidence of payment. It also alleged that Keystone Bank was acquired without payment evidence and highlighted previous acts of corruption and theft in the CBN. The report recommended the dissolution of the boards of the banks and a revocation of the sales.
The CBN’s decision to dissolve the boards and managements of the banks demonstrates its commitment to taking firm actions against infractions. However, industry analysts have called for more clarity on the reasons behind the decision to avoid dampening investor confidence. They argue that the CBN needs to provide further explanation to ensure that foreign investors maintain their interest in Nigerian banks, particularly as the industry enters a recapitalization phase. The CBN has reassured the public about the safety of depositors’ funds and its commitment to upholding a strong and robust financial system in Nigeria.
It remains to be seen how the dissolved banks will respond to the CBN’s actions and whether further investigations will be conducted based on the recommendations of the Obazee report. The outcome of these developments will have significant implications for the banking industry in Nigeria and will shape the future actions of both regulators and market participants.
