9 banks pay N643.6m fines in one year

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By Omodele Adigun

Last year, nine banks paid a whopping N643.621million fines for various infractions, Daily Sun can reveal.

Investigation revealed that the banks were fined by such regulatory institutions as Central Bank of Nigerian (CBN), Securities and Exchange Commission (SEC), Asset Management Corporation of Nigeria (AMCON) and Nigeria Deposit Insurance Corporation (NDIC).

The banks affected are Fidelity Bank, which paid N175.325million fine; FBN Holdings (N102 million), FCMB Groups (N88.76 million), UBA (N87.64 million).

Others are Guaranty Trust Bank (N62.05 million) Access Bank (N49.475), Union Bank (N48million), Zenith Bank (N16 million) and Sterling Bank (N14.371 million).

It was gathered that the banks were fined for such infractions ranging from late filing of financial reports, abuse of customers’ Automated Teller Machine cards, failure to undertake statutory due diligence, violation of anti-money laundering laws, cheating customers and anti-terrorism regulations relating to funds transfer, among others.

Analysis shows that CBN fined Fidelity Bank Plc N174 million for nine market infractions in 2016, while NSE sanctioned the bank N700,000 for late filing of audited result and accounts year ended 2016.

CBN, SEC and NSE fined FBN Holdings Plc N102 million for 17 market infractions in 2016. A breakdown of the holding company’s infractions showed that it paid N400, 000 to NSE for late submission of 2015 annual accounts, while SEC penalised the holding company N20.75 million for late submission of 2015 annual accounts and fourth quarter unaudited accounts.

In addition, FBN Capital Limited was fined N418, 000 by SEC for not responding quickly to request for information and N135, 000 by SEC for contravention of section 161 of ISA 2007 regarding the issuance of unregistered units of FBN Nigeria Eurobond Fund.

Also, the bank subsidiary, First Bank of Nigeria Limited, was fined N30million by CBN in respect of registration of international money transfer operations (IMTOs) and N20 million for cases of linking multiple accounts to single biometric verification number (BVN).

CBN also sanctioned the bank N12 million for various anti-money laundering and countering financing of terrorism infractions emanating from spot checks carried out on the bank’s branches in January 2016, among others

Commenting on these penalties, the immediate past President of Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, lambasted the CBN, SEC, AMCON and NDIC for allegedly “feeding on shareholders’ fund.”

Nwosu, accused the statutory bodies of instituting policies that create operational difficulties for the banks and have them trapped in a web of processes that results in unavoidable penalties.

His words: “They are looking for money to make up their own expenses. But these monies should not be at the expense of shareholders. Central Bank is also helping to destroy the banks. They are only a theoretical outfit. We had always expected that once we have a practising banker that assumed the position of Central Bank governor, he should understand the problems of the banks in this country.”

Speaking at Fidelity Bank annual general meeting recently in Lagos, the former ISAN boss expressed hope that the appointment of  Mr. Ernest Ebi as the Chairman would assist in relieving the bank of the financial burden imposed on it by the regulatory bodies, which resulted in a total penalty of N175.23 million in 2016, as against N44.5 million in 2015.

Another shareholder, Boniface Okezie, the President of Progressive Shareholders Association, wanted an end to the statutory levies imposed on banks by AMCON and NDIC, which he said impacted negatively on the shareholders’ asset.

“Some of these CBN penalties are not something you can avoid because they organise it in a way that makes it practically impossible for you to meet up with the deadline, for instance, in the case of submission of reports or returns.

“In submitting these returns, you have to be factual and up-do-date; you cannot beat the deadline just like that,” said Mukhtar Mukhtar, Chairman, Trusted Shareholders’ Association.

Reacting to the shareholders’ outbursts, the CBN spokesman, Mr. Isaac Okorafor said:

“No regulator would be happy to see that banks are failing due to breach of regulations by operators. Some of those infractions that these banks are committing, are stipulated, while some are discretional. But the truth is that any time banks commit those infractions, they impinge on the stability of the financial system. And CBN can not fold its arms as regulator to allow management of banks to pull down the financial system, especially now that the global economy is going through severe crisis. Shareholders are failing on their roles by allowing management that are not  playing by the rule to stay in office. They are supposed to put pressure on management of  banks to do the right thing or to play by the rule so that such sanctions will not erode shareholders’ funds.

Why would a bank that does not have approval would go ahead to open a branch? Why would a bank not submit financial statement when due?”

In the case of penalty for opening a branch without approval, for which many banks were found blameworthy in 2016, Mukhtar also blamed the apex bank.

He stated: “You can apply to CBN to open a branch in an environment you find lucrative; yet the approval takes an unduly long time to come through. If you are set for business that will yield you N100 million revenue, for instance, you can go ahead with the branch operations, pay the N2 million penalty and pocket your handsome revenue. The banks have to be smart in doing their business because banking is highly competitive. The customer you rejected would be taken by your competitor.”


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