Court Stops CBN, Others From Selling Finbank - The Guardian

[TGD]

A FEDERAL High Court, Lagos, yesterday restrained the Central Bank of Nigeria (CBN), Finbank Plc, First City Monument Bank (FCMB) and directors of Finbank from "selling or howsoever taking any steps and/or further steps to dispose and /or sell in any manner whatsoever Finbank Plc to FCMB."

Trial Judge, Okechukwu Okeke, also restrained them from taking further steps on a purported Memorandum of Understanding (MoU) for business combinations recently signed between the two banks.

In his ruling on an ex-parte application filed by the former Managing Director, Finbank, Okey Nwosu and an erstwhile Executive Director of the bank, Dayo Famoroti, Okeke restrained the two banks from altering the shareholding structure of Finbank in favour of FCMB.

The orders are to subsist pending the hearing and determination of the suit fixed for May 26, 2011.

Meanwhile, the National Insurance Commission (NAICOM) has instituted an advisory committee on divestment of banks from insurance institutions in the country.

Inaugurating the eight-member committee in Lagos yesterday, Commissioner for Insurance, Fola Daniel, said the Commission decided to put this committee in place to ensure minimal disruption in service delivery, adequate protection of policyholders and emergence of a stronger insurance market.

The Central Bank of Nigeria (CBN) had directed all banks operating in the country to divest from non-banking activities effective May 14, 2012, and concentrate on core banking businesses.

Nwosu and Famoroti were among top bank chiefs removed by the Governor of the CBN, Lamido Sanusi, in the wake of the banking reforms embarked upon by the current management of the apex bank.

But in the fresh suit, Nwosu and Famoroti are challenging the propriety of the MoU signed by Finbank and FCMB without recourse to them as shareholders of Finbank.

After entertaining arguments from the plaintiffs' lawyer, Onyebuchi Aniakor, the court also ordered that the defendants should be served the originating summons and other processes in the matter through the company secretary or any other officer at the Head office situated at 1, Akin Adesola Street, Victoria Island, Lagos.

The court further directed the plaintiffs to file an undertaking as to damages should it turn out that the orders ought not to have been made.

Justice Okeke also fixed May 26 for hearing of the motion on notice for interlocutory injunction.

Daniel said the committee is mandated to review the CBN's divestment directive on bank-owned insurance companies; identify risk and challenges in the implementation of the divestment from the perspective of policyholders protection and corporate governance; prescribe measures that NAICOM can put in place to avoid or mitigate the impact of any identified risk; and recommend any other measures that will be necessary in the implementation of the divestment in the interest of the growth of the Nigerian insurance industry.

He added: "It is the expectation of the Commission that the institutions being divested from would retain sufficient capital to support existing businesses and new ones; that funds for life assurance companies remain intact that dividends are not paid out without the consent of NAICOM; that any risk from the identity, integrity, suitability and financial capability of any potential new stakeholders is dealt with; and that the divestment process runs smoothly".

Mr. Lanre Laoshe, who sponsored the Insurance Act 2003, is chairman of the committee, which has members drawn from Securities and Exchange Commission (SEC), the Nigerian Stock Exchange (NSE), insurance industry and the legal profession.

The committee is expected to submit its report on July 15, this year.

Nwosu and Famoroti had listed Finbank, its Managing Director, Suzanne Iroche and two Executive Directors of the bank — Adam Nuru and Omoruyi Iyamu — as co-defendants in the suit.

The list also included nine non-Executive Directors of Finbank –Theo Osanakpo, Iheanyichukwu Anyadiegwu, Agnes Ebubedike, E.O Ofobi, Ernest Oji, Aliyu Gafar, Opeyemi Oye, Lamba Zannah and Usman Umaru as well as FCMB and CBN.

The plaintiffs in the petition, which was brought pursuant to Rule 4 (A) (I) of the Companies Proceedings Rules, 1992 and Sections 310 and 311 of the Companies and Allied Matters Act, 2004, claimed that they were shocked to discover through newspaper publications that Finbank and FCMB had already signed an MoU for business combinations under the active supervision of the CBN without recourse to them as shareholders of Finbank.

The plaintiffs added that when they made further enquiry, they discovered that it had already been agreed under the said MoU that the entire capital base of Finbank would be cancelled, and that the bank will be dissolved without winding up.

Nwosu and Famoroti averred that they were illegally detained by the Economic and Financial Crimes Commission (EFCC) till date when they went to report at the Lagos office of the anti-graft agency in line with the conditions attached to the bail granted them by the Federal High Court in Lagos.

They further alleged that ever since taking over the affairs of Finbank, the CBN-appointed management had been running the bank in "an oppressive and illegal manner" without recourse to shareholders and their shares.

They are therefore urging the court to mandate Finbank directors and CBN to render the account of their dealings in the bank ever since they took over the day-to-day running of the bank.

They also want the court to direct that a general meeting of Finbank should be conveyed for the purposes of considering the account of the stewardship of the CBN-imposed management in the bank and also to elect directors out of the shareholders.

They are also seeking an order restraining the respondents from disposing the investments and assets of Finbank, including but not limited to the business operations and affairs to FCMB or any other similar entity.



Source: Court stops CBN, others from selling Finbank