EXCLUSIVE: ‘Utmost discretion should be exercised,’ Economist says as CBN sacks Boards of Directors of three banks

The Chief Executive Officer, Centre for Promotion of Private Enterprise (CPPE), Dr Muda Yusuf has said the Yemi Cardoso-led Central Bank of Nigeria (CBN) needs to exercise utmost discretion, caution and care while investigating alleged infractions in some Deposit Money Banks (DMBs). 

Yusuf, a seasoned economist was reacting to the sack of the Boards of Directors of the banks by the CBN on Wednesday night. The affected banks include; Polaris, Union and Keystone Banks.

The CBN announced the decision in a statement released on Wednesday night.

NewsClick Nigeria gathered that action might be one of the recommendations of the Special Investigator, Jim Obazee, appointed by President Bola Tinubu in July 2023.

Obazee was appointed to probe the activities of the CBN and other relevant establishments under the immediate past administration of President Muhammadu Buhari.

Reacting to the development in an exclusive interview with NewsClick Nigeria, the former Director General of the Lagos Chamber of Commerce (LCCI) said: “The main pillar of the banking system is confidence. This makes the financial system very sensitive to developments that could undermine the confidence of depositors and investors.
This is why the handling of current investigations concerning these banks need to be done with utmost discretion, caution and care. We cannot afford a run on any of our banks at a time like this. The economy is still grappling with very challenging macroeconomic headwinds.”

Yusuf further noted the apex bank should not take actions that will send negative signal to the banking public.
“If there are proven infractions in the management or governance of the banks, utmost discretion should be exercised in dealing with the situation to avoid negative signalling. Meanwhile, depositors need to be firmly assured of the safety of their funds as this development unfolds.”

But the CBN in its statement Wednesday accused the banks of regulatory non-compliance, corporate governance failure, among others.

“This action became necessary due to the non-compliance of these banks and their respective boards with the provisions of Section 12(c), (f, (g), th) of Banks and Other Financial institutions Act, 2020,” a press statement by the bank’s spokesperson, Sidi Hakama, said.

The CBN said the banks’ infractions vary from regulatory non-compliance, corporate governance failure, disregarding the conditions under which their licenses were granted, and involvement in activities that threaten financial stability, among others.

Obazee, in a report he submitted to President Bola Tinubu on 20 December, had said the former governor of Central Bank of Nigeria (CBN), Godwin Emefiele, used “ill-gotten wealth” to establish TTB and used it to acquire Union Bank and Keystone Bank through some persons serving as his proxies.

Obazee’s investigations revealed questionable ownership and loans linked to Emefiele. He had also recommended that the banks be forfeited to the federal government.