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Savannah Bank, Societe Generale Bank and the ''Abiku'' Myth By: Rasheed Abdullahi-Alli

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In days of yore, the African traditional belief accepted the concept of reincarnation. The Yorubas of South-west Nigeria in their mythology comprehended the manifestation of 'Abiku' (still born).

Abiku are children who died suddenly, mysteriously and prematurely but were reputed to have power to come to life again to their parents through repeated births.

To make an Abiku live or ward him off permanently, parents used to consult powerful herbalists to break the jinx of their repeated births and deaths. Sometimes, parents would perform horrible sacrifices such as placing hot metals to inscribe scars on the Abiku or tying bangles around their neck and legs before burial.

Often times, the Abiku defied all these, including divinations and charms of herbalists and would still return to the same parents even with the scars.

This nature of Abiku soon gave rise to an adage: Abiku s'ologun de'ke, which literally translates as the still-born that defies the power of herbalist. Most herbalists therefore resorted to staying-off the Abiku in order to preserve their integrity.

To demonstrate the vanity in any efforts at breaking the Abiku jinx, Nobel Laurel, Prof. Wole Soyinka wrote of the boast of an Abiku in a poem titled Abiku: ''In vain your bangles cast; charmed circles at my feet; I am Abiku, calling for the first and repeated times......''

To this end, the question in every boy's mind has been; who will confront and conquer Abiku?. Your guess is as good as mine. However, the myth about the Abiku and herbalists is fast becoming the metaphor of the Savannah Bank of Nigeria Plc (SBN) and Societe General Bank of Nigeria Limited (SGBN) to Central Bank of Nigeria (CBN).

Undoubtedly, the case of the SBN and SGBN appears to be an albatross to the regulatory authorities. As it is today, it seems the CBN has adopted a ''siddon'' look attitude or has lost powers to make banks live by resolving their distress status or pronounce their death through revocation of failed banks licences to the ''Abiku'' SBN and SGBN.

What the Law Says
The CBN is the only body in Nigeria conferred with statutory powers not only to issue operating licences to banks, but also to revoke such licences.  The CBN derives its powers to revoke banking licence from sections 12 and 36 of the Banks and other Financial Institutions Act ( BOFIA), 1991 (as amended); the statute enacted to specifically govern banking operations, supervision and resolution in Nigeria. These powers flow from its mandate to promote sound and stable financial system in Nigeria as contained in section 2 (d) of the CBN Act 2007 (as amended).

Also, the Companies and Allied Matters Act (CAMA), 1990 and the Nigeria Deposit Insurance Corporation (NDIC) Act No 16 of 2006 provide, amongst other laws govern the winding up of the affairs of insured banks and other deposit-taking financial institutions in Nigeria be they deposit money banks(DMBs), microfinance banks(MFBs) or primary mortgage institutions(PMIs). To banks in Nigeria, CBN is the giver and taker of life.

The Road to Closure:
In the case of the two Abiku banks, SBN had its operating licence revoked by the CBN on February 15, 2002 over alleged grave financial condition of the bank which culminated in the total erosion of its capital base resulting in insufficient assets to meet its liabilities. The bank was also alleged to have failed to comply with the obligations imposed by CBN. On the other hand, SGBN's operating licence was withdrawn in January 2006 following its suspension from the clearing house two years earlier. 

However, seven years after the revocation of SBN's licence, precisely on 5th February, 2009, the Court of Appeal, Abuja presided over by Justice U. M. Abba'aji ordered that the licence be restored to the bank when the bank successfully canvassed that the CBN prematurely revoked its operating license. The Court of Appeal proceeded to prescribe six months within which SBN should capitalise.

The Court's deadline expired in July 2009.  On April 2, 2008, SGBN also had its licence restored back on the order of the Federal High Court sitting in Abuja, presided over by Justice Binta Murtala-Nyako when it argued that the revocation of its (the SGBN) operating licence was done in bad faith. Like in the case of SBN, the Court gave SGBN 30 days within which to return to operations. The CBN declined to challenge the decisions of the two courts.

Despite the palliative measures and olive branch extended to the failing banks to resuscitate their operations, the owners have since then been reluctant to empathise with the teaming depositors whose funds were trapped in the two banks.  The major reason for the inability to re-launch their status is that they are both insolvent and grossly undercapitalised.

What Went Wrong?
To borrow from the famous poser of the CBN Governor, Malam Sanusi Lamido Sanusi, at the 2010 Convocation lecture of the Ahmadu Bello University (ABU) Zaria with the theme: “The Nigerian Banking Industry: What went Wrong and the Way forward”, what went wrong in the revocation of the banking licences of the two banks?  How could a dead bank rise? The answer lies in the fact that though the CBN has the right to give life to a bank and take it away, that power has been made subject to judicial review. That innocuous proviso which was inserted in section 49 (1,) which ironically was to protect the CBN and its officers from adverse claims or liability arising from litigation also ensures that CBN'S action were carried out in good faith.

The section empowers shareholders of banks to challenge the revocation of the operating licences of their banks with the sole aim of proving that there was bad faith in their revocation. So far, the two banks have successfully invoked the section and are now successfully the living dead (Abiku) banks. What is then the fate of the depositors in these debacles?. NDIC Act can only provide the solution if the owners of these failed banks agree to throw-in the towel rather than wait endlessly for injection of fresh funds by the shareholders.

Aftermath of the Revocation of Licences of SBN and SGBN:

Besides the myth of Abiku and except for Jesus Christ and Lazarus as espoused in biblical teachings, when a person dies, he stays dead. It is also expected that when the CBN declares a bank failed and revokes its operating licence, the bank stays dead.

It will now be the responsibility of the mourners, among whom would be the depositors of the bank, creditors, shareholders, management and staff of the bank, led by the Liquidator-in-Charge i.e. Nigeria Deposit Insurance Corporation (NDIC), to ensure that the bank is given a befitting burial. However, the situation in Nigeria is such that the banks' throes of death sometimes lead to their resurrection in the same manner as the Abiku. Unlike the biblical accounts of those who survived death, the two entities (SBN and SGBN) which rose from revocation of their operating licences are yet to open their doors three years after the epoch judicial decisions.

Where Do We Go from Here?
The consequences of the inertia on the part of the Shareholders of the two banks to recapitalise them and put them back on stream on the one hand and the reluctance of the regulatory bodies, particularly the CBN to take a decisive action to resolve the crisis in the two banks is causing an unwarranted distortion and name calling in the banking system. My findings show that with the restoration of the two banks (SBN and SGBN) licences, the matter had been taken out of the jurisdiction of the NDIC in whom the depositors would have found solace.

Thus, it is only the CBN that can wipe the tears off the faces of the hapless depositors by acting decisively on the logjam. The promoters of the banks have continuously trampled upon the rights of the depositors who deserve to be protected by the law more than the shareholders who were actively involved in the collapse of the two banks.  

The most unfortunate aspect of this drama is the wanton disregard of the rights of the depositors who have been deprived of their hard earned deposits which had been trapped in the SBN and SGBN for ten years and six years respectively. It is very hard to imagine how these teeming depositors would stand-by and watch endlessly without seeking redress from the same courts which restored the licences of the two banks.

At the moment, it is a case of a camel passing through the needle's eye for the CBN to absolve itself of blame in this quagmire. For instance, while the judgement of the Court of Appeal delivered on 5th February, 2009 ordered the restoration of the operating licence of SBN, the court went ahead to make a consequential order, directing the CBN to give the SBN up to six months as per its (the CBN) circular to all banks just about a month before the revocation of SBN licence on February 15, 2002.

The CBN circular being referred to by the court was issued on January 10, 2002, which gave a six-month deadline (i. e. January 10 – July 1, 2002) to all banks to re-capitalise, failing which appropriate supervisory intervention would be applied. The Court's deadline had expired since September 2009. In the case of SGBN, the court equally gave a 30-day deadline within which to resume operations which had since expired. The intransigence by the CBN is therefore to blame for the present predicament.

In clear terms, the CBN does not owe the shareholders any duty to allow dead banks to live. Rather, it has a duty to alleviate the sufferings of the depositors of the SBN and SGBN by diligently and fearlessly exercising its power to send the two Abiku banks back to their graves in the interest of the hapless depositors. Suffice it to say that the shareholders had recouped their investments long before running the banks aground through various insider abuses and other corporate governance infractions. Therefore, it is left to the CBN to take the path of honour by revoking the operating licences of the two banks in order to give way to the NDIC to commence the process of discharging its mandate of depositors' reimbursement.  

Mr. Alli is a Lagos-based financial analyst.