Customers’ Dispute: Diamond, Union Bank,7 others  to spend N1.86trn

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diamond bank, cbn

…Four banks in 3,000 litigation cases

….Fidelity records lowest value of claimed cases

By  Kayode Tokede

Following increased legal actions filed against commercial banks by customers, a total of nine banks led by   Diamond Bank Plc  and Union Bank of Nigeria ( UBN)

were involved in N1.86 trillion claimed cases across federal  and State courts across the country.

In 2016, the nine commercial banks were involved in a cumulative N1.6 trillion claimed cases slammed by their customers for various offences relating to alleged errors, omissions and breaches.

According to Nigerian NewsDirect findings, commercial banks’ customers as well as financial institutions in the country continued to lose billions as a result of engaging lawyers who lack depth in banks and customers dispute jurisprudence.

Some of these suits are being vigorously contested in courts across the country as some commercial banks are already making excess provisions, gulping into billions.

A reliable source explained to Nigerian NewsDirect that most cases against commercial banks increased significantly last year following the Central Bank of Nigeria (CBN) 2013 review of its guidelines on charges by Banks and other financial institutions in Nigeria that was effective from May 1, 2017.

Out of the nine commercial banks, four were involved in 3,000 litigations, an increase of about 19.1 per cent from 2517 reported in 2016.

The banks are Union Bank of Nigeria Plc, Diamond Bank Plc, Guaranty Trust Bank Plc (GTBank) and United Bank for Africa Plc.

According to our correspondent findings, Diamond Bank has the highest number of litigation in 2017 with 975 from 614 litigations by customers in 2016, followed by Union Bank of Nigeria with 850 litigations from 801 reported in 2016.

The breakdown of the N1.86 trillion claimed cases against the nine commercial banks revealed that UBA has the highest value of claimed cases while Fidelity Bank has the lowest value of claimed cases last year.

Other involved banks are Wema Bank Plc, FCMB, Zenith Bank Plc and Stanbic IBTC Holdings.

Diamond Bank explained that, “The Bank, in its ordinary course of business, is currently involved in 975 (December: 614) cases as a defendant and 283(December 2016: 88) cases as a plaintiff.

The total amount claimed in the 283 cases instituted by the Bank is estimated at N154,182,466,002 (December 2016: N155,721,929,731) while the total amount claimed in the 968 cases instituted against the Bank is N129,738,574,539 (December 2016:N211,944,409,760) for which provisions amounting to N473,101,698 (December 2016: N190,211,842) have been made.

“The actions are being vigorously contested and the Directors are of the opinion that no significant liability will arise there from in excess of the provision made in the financial statements,” the lender explained.

Union Bank of Nigeria in its 2017 audited result and accounts said, “The Group in the ordinary course of business is currently involved in 850 litigation cases (December 2016: 801 cases).

“The total amount claimed in the cases against the Bank is estimated at N220.26billion (December 2016:N152.96 billion), while the total amount claimed in cases instituted by the Bank is N77.16 billion (December 2016: N37.62 billion).

A total provision of N2.98billion (December2016: N3.10billion) has been made based on the advice of professional legal counsel.”

UBA in its financial statement for 2017 said, “The Bank, in the ordinary course of business is currently involved in 705 legal cases (2016: 650).

“The total amount claimed in the cases against the Bank is estimated at N659.17 billion from N486.92 billion in 2016.”

GTBank adds that, “The Bank, in its ordinary course of business, is currently involved in 470 cases as a defendant (31 December 2016: 452) and 427 cases as a plaintiff (31 December 2016: 263).

“The total amount claimed in the 470 cases against the Bank is estimated at N530.59 billion and $132.80 Million (31 December 2016: N464.9 Billion and $132.5 Million) while the total amount claimed in the 427 cases instituted by the Bank is N110.86 Billion (31 December 2016: N72.9 Billion).

“However, the solicitors of the Bank are of the view that the probable liability which may arise from the cases pending against the Bank is not likely to exceed N178.71 Million (31 December 2016: N139.47 Million).”

Stakeholders expressed that disputes between commercial banks and their customers, whether savers or borrowers, are inevitable like in any other commercial contractual transactions, due to risk factors that are not the focus of this legal enlightenment.

According to experts, some of these disputes will, of course, be resolved at customer care desks or via emails or phone calls, while some will end up in the court of law for adjudication.

In an exclusive chat with our correspondent during the weekend, a lawyer and a finance expert, Dr. Wunmi Bewaji, said awareness and fraudulent act of bank staff might have contributed to hike in claims cases last year.

He said, “It could also be depression too. Bank customers might be looking for ways to sue banks. Most banks customers sue banks based on charge that has to do with improper understanding of their obligation.

“A lot of frauds are committed by banks on customers in respect of what we call ‘small print’. In Nigeria as we speak, there is no small print legislation and it appears the CBN is not interested in doing anything about it.

“Most of the time, a customer is not aware of the rule and guideline relating to a particular transactions and banks are allowed by CBN to use jargon. Those jargons confuse bank customers in a country where you have high illiteracy. Financial jargon should not be allowed in a country where the financial market is still evolving.

“Excessive interest rate on loan is another major challenge between banks and customers. The CBN instead of protecting average customers is more or less protecting the banks.”

Also speaking, the former second Vice President of Nigerian Bar Association (NBA), Mr. Adekunle Ojo, attributed  claims by banks customers to  economic situation.

He said, “the reason for customers claim cases against banks continued to increase due to economic situation of the country. The banking system has no positive impact on banks customers unlike other climes where banks act as consultants to customers.

“The change in policy and unstable interest rate also contributed to dispute between banks and their customers.

”Bank customers are getting awareness unlike before. They are asking questions of access charges by commercial banks.  It is a good development that bank customers are seeking redress through the court.”

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