As 2019 general election approaches, all sorts of stories will come up about the personalities of the candidates. The tendency of coming after opposition’s big wigs would not make a surprise. For Bukola Saraki is the national leader or the main opposition party, the chances of blackmail on him will be higher. One of such likely issues of blackmail could be about the Societe General Bank of Nigeria.
Its therefore important to set the records straight because of the public right to factual information, particularly about public figures. In setting the record straight, however, it must begin on the CBN’s poor regulatory work and the NDIC’s failure in performing its statutory role. For several years, news reports, rumors and sponsored malicious attacks have linked the supposed downfall of the Societe Generale bank to the President of the Senate Dr, Bukola Saraki.
These reports are false and I will like to explore what really happened to Society Generale bank and their numerous customers after the Central Bank of Nigeria (CBN) made the wrong decision to terminate its license, a decision that was reversed after a lengthy court process that resulted in victory for the SGBN. This judgment did not stop the outright lies and the media attack on the management of SGBN and the Saraki Family.
In 2004, the CBN issued guidelines and incentives on consolidation in the Nigerian banking industry where banks were encouraged to recapitalize (by injecting funds into the banks) to the tune of 25billion Naira by December 31, 2005 or merge or be acquired. SGBN embarked on the exercise for merger or acquisition by other banks.
The CBN closed down SGBN in January, 2006 on account of failure to meet new minimum capital requirements US4155million (NGN 25bn) for a national bank. Meanwhile, one of the conditions was for SGBN to seek and obtain a forbearance of about 80-100% of its debts. SGBN was only granted the forbearance by the same CBN on January 5th 2006 after the deadline had elapsed.
SGBN dragged CBN to court immediately and in a Judgement delivered by Justice Murtala -Nyako in 2009, the Federal High Court reversed the revocation of SGBN’s operational license and declared that the CBN had overstepped its regulatory boundaries, Justice Nyako stated that the revocation was perpetrated in bad faith and was therefore null and void.
It was held that the fact that the fact that the CBN did not intend for the SGBN to meet the conditions imposed was the bad faith, which had foisted the court with the power to interfere with the power of the Governor of the CBN.
The CBN kicked and appealed the judgment as opposed to granting the license back immediately as the court had ordered, this phase went on for another year before the Central bank returned SGBN’s license as a regional bank and withdrew its appeal.
SGBN then rebranded and returned as Heritage bank in 2012 after meeting the new requirements by the CBN and AMCON after which it commenced an excercise to revalidate the accounts of old customers to give them the opportunity to either withdraw their money or reactivate their accounts with the bank.
Some of the stories being bandied around is that so many people lost their live savings to the bank leading to tragic stories, if any of this is indeed true the fault lies directly with the CBN that went ahead to revoke SGBN’s license in bad faith and the Nigerian Deposit insurance Corporation (NDIC) for not living up to its statutory role.
Nigerian depositors are insured according to the NDIC act, The Corporation is charged with the responsibility of insuring the deposit liabilities of licensed deposit-taking institutions. This was done to maintain public confidence in the banking system, thus fostering economic stability and growth.
During the needless legal tussle between SGBN and CBN, the NDIC should have done its statutory role of repaying depositors with less than 200,000 at the very least while others get paid on a pro-rata basis from proceeds of possible liquidation, this is the exact reason it was set up.
As at 2013, barely a year after operations, Heritage bank declared that customers have withdrawn over 60% of the 21bn deposit base it inherited from SGBN. Today, heritage bank claims they have completed the exercise 100 percent.
Bukola Saraki is a man with a profound pedigree and whose record of public services and achievements command the respect of many across the country.