The recent announcement by the Central Bank of Nigeria (CBN) regarding the dissolution of the boards of Union, Keystone, and Polaris Banks has stirred controversy and raised concerns among bank customers, investors, and analysts. The CBN’s statement lacked specific details on the alleged breaches of the Banks and Other Financial Institutions Act (BOFIA) 2020, committed by the dissolved board members, prompting questions and criticisms.
It’s move to dismiss the boards without providing clear reasons, in contrast to past practices, has fueled skepticism and uncertainty in the financial sector. Transparency in communication is considered crucial in central banking, as it helps mitigate panic and builds confidence in the banking system. The absence of specific information on the violations raises questions about the basis for the CBN’s action.
While Union and Polaris Banks have demonstrated financial stability in their recent financial statements, with capital adequacy ratios exceeding regulatory thresholds, Keystone Bank’s lack of financial disclosure for several years has been noted. However, critics argue that the CBN should explicitly state the grounds for its actions to avoid sending the wrong signals to customers and investors.
Of particular concern is the invocation of sections of the BOFIA related to the revocation of a bank’s license, even though the CBN did not officially revoke any licenses in this case. The absence of a detailed explanation for the dissolution has led to questions about its adherence to legal processes, especially given the non-existence of a CBN board at present.
The lack of clarity in the CBN’s statement has led to speculation about the influence of a Special Investigator, Jim Obazee, appointed by President Bola Tinubu to probe it under the leadership of Godwin Emefiele. Critics caution against undermining the regulatory independence of it and stress the importance of upholding transparency to maintain confidence in the industry.
As stakeholders await further details on its decision, there is a growing demand for clear communication and adherence to regulatory independence to ensure the stability of Nigeria’s financial system.
