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Adeleke reacts on recent move by CBN to sell banks

By Peter Egwuatu

Mr. Adebayo Adeleke,  General Secretary, Independent Shareholders Association of Nigeria (ISAN) has reacted on the plan by the Central Bank of Nigeria (CBN) to sell the five banks whose managing directors were sacked for alleged misuse of shareholders funds, saying it is illegal and unconstitutional.

The CBN had recently sacked the managing directors and executive directors of five banks, which include: Intercontinental Bank Plc, Oceanic Bank International Plc, Afribank Nigeria Plc, Fin Bank Plc, and Union Bank Nigeria Plc.

What is your reaction following CBN’s move to sell the five banks that was given financial bailout.

CBN has no right whatsoever to sell any privately and publicly owned bank. It can take disciplinary action against bank officials and impose sanction on banks that contravened its rules and regulation , but not to sell the banks. CBN is not the owner of these banks, then what right has it to sell what it does not have. There are framework to be followed for bank’s shares to be sold. In the first place CBN has not created any shares to be sold in that bank. For a share to be created, there is a rule in place.

The Companies and Allied Matters Act (CAMA) states that for a share to be created in any public company , the board of directors of such company must call for Extra Ordinary General Meeting (EGM) where a resolution would be pass by the existing shareholders. But in this case with the CBN, it cannot create any share except the board of directors comes out with a resolution which must be approved by the existing shareholders.

You mentioned that the rule in CAMA must be followed for the creation of new shares, what is the position of Banks, Other Financial Institutions Act ( BOFIA)?

Well, the CBN is only acting on the provision of BOFIA where they got the power to remove the banks’ chief executives. But the BOFIA, to my knowledge did not give the CBN  the right to create new shares for the banks. The CAMA is superior to BOFIA because it covers all companies other than the banks, while BOFIA covers only the banks and other financial institutions.
The CAMA has been in existence before the BOFIA. The Corporate Affairs Commission (CAC) that registers companies got their power from CAMA.
The CBN needs to go and read CAMA before taking any actions in these banks, especially regarding equity and ownership. We are waiting to see what the CBN is up to if they insist in inviting foreign investors to take up these shares.

What is the view of your association in the whole reform process of the banking industry?

Overall, Our shareholders group are of the opinion that the CBN approach has created crisis of confidence locally and internationally for our emerging economy. Our stand resolves around the fact that unless CBN totally reviews its approach the collateral damage on the economy would rubbish our economic gains since 1999. We advocate for a CBN that will moderate the affairs of the banking institutions but chat a clear direction for a sustainable national economy that is capable of attracting  and sustaining foreign investors.

We suggest that in repositioning the nation’s banking institution government and its agencies like CBN should demonstrate a high level of sensitivity which the industry requires and run the affairs of the institutions in a way and manner devoid of extraneous colorations.


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