High Court Halts Operations of Nationalised Banks [Thisday]

CBN Governor, Sanusi Lamido Sanusi

By Davidson Iriekpen

The Federal High Court in Lagos has temporarily halted the operations of the three commercial banks that were recently nationalised by the Central Bank of Nigeria (CBN).

They are Mainstreet (from the defunct Afribank), Keystone (Bank PHB) and Enterprise (Spring Bank).

Ruling on the ex-parte application filed by Chuks Nwachuku on behalf of some aggrieved shareholders of the former banks, the presiding judge, Justice Charles Archibong, restrained the banks from further dealing with the assets, businesses and operations of the three banks pending the determination of the motion on notice filed by the aggrieved shareholders.

The shareholders, among whom are Boniface Okezie, Adeyemi Kehinde, Adebowale Bolanle and Cole Alexander, in the motion ex-parte are seeking for an order to restrain the three new banks, the CBN, the Nigeria Deposit Insurance Corporation (NDIC) and the Asset Management Corporation of Nigeria (AMCON) from further dealing with the assets, businesses and operations of the nationalised banks.

The shareholders had gone to court to challenge the nationalisation of the three banks, saying that the actions violated their rights to freedom from compulsory acquisition of property guaranteed under the constitution and the prohibition of nationalisation of enterprises contained in Section 25 of Nigeria Investment Promotion Commission Act Joined as respondents in the suit are the three nationalised banks, the CBN, NDIC, AMCON, the Securities and Exchange Commission (SEC), the Nigerian Stock Exchange (NSE), the three banks and the Minister of Finance.

In the suit, the shareholders argued that the revocation of the licences of the banks by the CBN Governor, Sanusi Lamido Sanusi, was prejudicial to their rights to invest in public quoted companies in accordance with the Nigeria Investment Promotion Commission (NIPC) Act and the Investment and Security Act (ISA).

Part of the reliefs sought by the shareholders include a declaration that the action of the CBN, NDIC and the AMCON in purporting to transfer the assets, businesses and operations of the nationalised banks to the new banks is a breach of their fundamental human rights to freedom from compulsory acquisition of property as guaranteed by the constitution.

They are also seeking for an order of the court for the respondents to jointly and severally pay them punitive damages to be determined by the court through their lawyer for the diminution in the value of their shares of the nationalised banks as a result of the unlawful and malicious conduct of the CBN governor.

The shareholders are equally seeking an order of perpetual injunction restraining the three new banks, the NDIC and the AMCON from offering for sale or advertising or representing to any person, any intention or offer for sale or transferring or purporting to transfer to an person any interest in the assets, businesses and operations of the three nationalised banks.

They also want the court to make an order granting the nationalised banks a period of six months or an extension of time within which to recapitalise or attain any requisite level of recapitalisation as determined by the court and free of any interference from the CBN or its governor.

The court has fixed hearing of the substantive motion for November 28, 2011.

The CBN had set September 30 deadline for all banks in the country to recapitalise but on August 5, it revoked the licences of the three banks and nationalised them.

Following its action, the NDIC had taken them over and proceeded to creating three bridge banks to take over the assets and liabilities of the affected banks in the interim.

Reacting to the ruling last night, the CBN said it was a rumour as none of its lawyers was aware of the suit in respect of the nationalised banks.

Speaking through its spokes-man, Mohammed Abdullahi, the apex bank said: "We have heard the rumours and we have spoken with our lawyers who have all confirmed that no process or processes have been served in respect of the nationalised banks. So the whole thing is a rumour as far as we are concerned.”