We have no plans to revoke Unity, Polaris, Keystone Banks’ licence — CBN

…As CBN settles N400bn First Bank loan

By Seun Ibiyemi and Matthew Denis (Abuja)

The Central Bank of Nigeria (CBN) says it has no plans to revoke the licences of Unity, Polaris, and Keystone banks.

Online reports had claimed the apex bank would terminate the licences of the three banks, following the revocation of Heritage Bank’s licence.

However, in a post on its social media pages on Tuesday, the bank said the content was not authentic.

“The content is fake and not from the CBN,” the post reads.

On June 3, the apex bank  revoked the banking licence of Heritage Bank.

According to the CBN, the decision was made due to the bank’s inability to improve its financial performance.

“The Board and Management of the bank have not been able to improve the bank’s financial performance, a situation which constitutes a threat to financial stability,” the CBN said.

However, the apex said Heritage Bank had not improved and “has no reasonable prospects of recovery,” thereby making revoking the licence the next necessary step.

The bank said “the Nigeria Deposit Insurance Corporation (NDIC) is as a result of this appointed as the liquidator of the bank per Section 12 (3) of the Banks and Other Financial Act (BOFIA) 2020.”

The revocation, according to the apex bank, reflects its continued dedication to take all necessary steps to ensure the safety and soundness of Nigeria’s financial system.

Meanwhile, the Central Bank of Nigeria (CBN) has settled the over N400 billion owed to First Bank by the now-defunct Heritage Bank, according to the lender and sources familiar with the matter.

“First Bank had exited the exposure and CBN settled the Bank,” the lender’s corporate communications manager, Ismail Omamegbe, said Tuesday.

Another source confirmed that the CBN has paid off First Bank’s exposure to Heritage, given that its intervention was at the behest of the apex bank under Emefiele.

In 2018, First Bank, serving as the clearing bank for all Heritage Bank cheques, noticed an alarming discrepancy.

Of the cheques cleared for Heritage Bank, a substantial N200 billion remained unpaid. This revelation sent ripples of concern through First Bank’s boardroom.

The gravity of the situation was clear: allowing this debt to persist unaddressed posed a significant risk to the bank’s financial stability. However, the potential fallout from pulling the plug on Heritage Bank was equally daunting.

Godwin Emefiele, then Governor of the Central Bank of Nigeria (CBN), stepped in amid the brewing crisis, with a bold proposition.

The emperor, as he was called in banking circles, offered a central bank guarantee on behalf of Heritage Bank, ostensibly to be executed in 2019. This move, a lifeline for Heritage Bank, was designed to assuage First Bank’s concerns and provide a safety net, backed by the Central Bank’s authority.

Fast forward to 2020, the situation took a dire turn.

During a pivotal board meeting, First Bank’s directors were confronted with a distressing notification from their auditors, PricewaterhouseCoopers (PwC).

The auditors revealed that the much-vaunted CBN guarantee was conspicuously absent. This revelation left the board in a state of shock. Questions were immediately directed at then-Managing Director, Adesola Adeduntan, who defended the bank’s position by asserting that Emefiele had given his word regarding the guarantee.

Despite Adeduntan’s reassurances, the absence of a formal guarantee was a glaring oversight that PwC could not overlook.

Compounding the problem, by this time, the debt had ballooned from N200 billion to N300 billion, exacerbating the financial strain on First Bank. The board’s patience was wearing thin, and they issued a stern directive to Adeduntan to secure the guarantee without delay.

The unfolding debacle reached a climax when the board was unceremoniously sacked by Emefiele who had taken offence to the board’s insistence on a formal guarantee.