The Central Bank of Nigeria claimed the bank could not meet some of its obligations, the bank disputes that to date. A Federal High Court in Abuja ruled on 20 October 2006 that CBN closure of the bank was legal.
It was the first phase of the legal encounters that started on 18 February 2002, three days after the CBN revoked the bank’s license
The legal battles continued to the Court of Appeal, which last February dismissed the judgment of the high court. It asked the CBN to restore Savannah’s license, while the bank had to meet the industry regulatory requirements.
It took seven years for Savannah to get justice. It could have been longer if the CBN decided to plead its case at the Supreme Court. In seven years, many Savannah Bank staff, depositors and directors suffered untold hardship. Businesses collapsed and some affected individuals died from the stress.
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only a few would be convinced that the decision to close a bank that had 140 branches before consolidation exercise produced 25 banks from 89, was not political. Neither the CBN nor the Nigeria Deposit Insurance Corporation, NDIC, has been transparent in saying what was wrong with Savannah Bank.
In trying to exonerate itself from the hasty decision, NDIC says it was only an undertaker when it moved in to secure the assets of the bank across the country.
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Under the guise of confidentiality, stopping panic in the sector and supposedly protecting depositors, the CBN and NDIC missed the mark in closing Savannah Bank. The agony those who the decision short-circuited their lives and businesses went through meant nothing to the authorities. All they had to do was close the bank.
Whatever wrong-doing the CBN and NDIC accused Savannah Bank of boldly represents the regulatory laxity both organizations encourage. Where were the regulatory authorities when Savannah Bank allegedly breached the rules?
What did they do? Was taking the bank out of business for seven years (it would have been forever) the best approach? Who would compensate the innocent depositors who depended on the CBN and NDIC to protect them? What did the closure achieve? How did the closure serve the interest of depositors?
NDIC Managing Director, Alhaji Ganiyu Ogunleye at the handing over of the bank’s premises to its directors hinted at the losses. NDIC, he said, could not locate 25 of the branches; it could be assumed that the assets in those places have disappeared. Offices that have been shut for seven years would be in a state too.
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Your immediate challenge would be how best to handle the pent-up demands of depositors, Ogunleye advised Savannah directors.
The immediate challenge for the authorities is to ensure that banking regulations are transparent enough for depositors to know how much protection they can get for their deposits and investments, whether the protection is from CBN, NDIC or the banks themselves.
vanguardngr
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