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CBN is cracking down on select Nigerian banks for non-compliance

The Central Bank of Nigeria has removed and replaced the management team of Union Bank, Keystone Bank, and Polaris Bank.

CBN is cracking down on select Nigerian banks for non-compliance
Yemi Cardoso, CBN Governor

On Wednesday night (January 10), the Central Bank of Nigeria (CBN) dissolved the management teams of three Nigerian banks: Union Bank, Keystone Bank, and Polaris Bank. Sidi Hakama, the acting head of corporate communication at the CBN, attributed the decision to the non-compliance of the banks and their boards, referencing section 12 (c, f, g, and h) of the Banks and Other Financial Institutions Act, 2020.

"The Bank's infractions vary from regulatory compliance, corporate governance failure, disregarding the conditions under which their licenses were granted, and involvement in activities that pose a threat to financial stability," Hakama said.

Since assuming office, President Bola Tinubu of Nigeria has initiated an inquiry into the operations of the Central Bank of Nigeria (CBN) during the tenure of the former governor, Godwin Emefiele. In July, Tinubu designated Jim Obazee as a special investigator focusing on the CBN and its affiliated entities.

Obaze's mandate is to collaborate with relevant security and anti-corruption agencies to conduct a comprehensive examination. Three weeks ago, the special investigator presented 17 allegations against the former CBN governor. One is that Emefiele used intermediaries to acquire Union Bank of Nigeria on behalf of Titan Trust Bank Limited.

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In December 2021, Titan Trust Bank secured an 89.4% ownership in Union Bank. By June 2022, following the finalisation of the deal, the stake was increased to 93.4% in an off-market deal worth ₦191 billion.

Late last year, Obaze extended an invitation to Tunde Lemo, who serves as the chairman of Titan Trust Bank and was formerly the deputy governor in charge of operations at the CBN, regarding the aforementioned acquisition. The invitation was issued with the intent of questioning Lemo about the origin of the $500 million used in the acquisition. According to Business Day, Obaze and his investigative team suspect that the funds may have originated from Emefiele; the former CBN governor is facing six counts of fraud and corruption. He was granted bail in November.

In response, Lemo contended that the acquisition of Union Bank of Nigeria Plc adhered to due process and met all regulatory requirements, including those of the Securities and Exchange Commission and the CBN.

As the investigations unfold, the Central Bank has appointed new leaders for Union Bank, Keystone Bank, and Polaris Bank.

Yetunde Oni, the former CEO of Standard Chartered Bank, Sierra Leone, assumes the role of CEO at Union Bank, accompanied by Mannir Ubani Ringim as the bank's new executive director, succeeding Mudassir Amray, the former MD/CEO.

Hassan Imam, currently an executive director in the North Directorate of Fidelity Bank, is appointed as the CEO of Keystone Bank, with Chioma A. Mang serving as Keystone's executive director. Additionally, Lawal Mudathir Omokayode Akintola, a director at Sage Grey Finance Limited, is appointed as the CEO of Polaris Bank, and Chris Ofikulu will serve as its executive director.

This isn't the first time CBN has taken such steps. In 2016, Skye Bank's board was removed, and in 2021, First Bank's board faced a similar action.

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