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Customers of Savannah Bank wait indefinitely for it to start operations more than four years after Court of Appeal ordered the Central Bank of Nigeria to restore its operating licence

|  By Pita Ochai  |  Feb. 18, 2013 @ 01:00 GMT

THERE seems to be no hope for customers of Savannah Bank of Nigeria, PLC, SBN, who had their deposits trapped in the bank. Four years after the Central Bank of Nigeria, CBN, reinstated the operational licence of SBN, the bank is yet to start operations. Its branches around the country and the operational headquarters along broad street, Lagos, are still locked up. The fear of most depositors is that it is taking too long for the bank to begin operation after its licence was reinstated.

Pat Nwobodo, SBN executive director of services, had assured management of the Nigerian Deposit Insurance Corporation, NDIC, that the bank would open for operation within six months after its licence was reinstated. So far, the management has failed to meet the targeted resumption date.

Adebayo Julius, a depositor, said that most people who had their money trapped in the bank were happy when the court ordered that the operational licence of the bank should be restored. But the delay in reopening the bank is making most of the depositors lose hope of ever getting back their money. “Most of us have lost hope of getting our money back from the bank. Since the bank has not started operation after four years, I think there is a serious issue which is yet to be addressed by its management,” he said.

A source from the CBN, who wishes anonymity, confirmed that the bank has not started operation because of its inability to recapitalise. From its documentation with the CBN, the SBN opted to resume operation as a national bank. The CBN set N25 billion as recapitalisation for banks operating on national scale in the country which SBN has not been able to meet. If the SBN choose to operate international banking under the new CBN rule, it would require N50 billion to recapitalise, and N10 billion for regional banking.

The Court of Appeal, had on February 5, 2009, ordered that the operating licence of the bank be reinstated and gave it  six months to capitalise. After the court order, the SBN made several attempts to reopen. In July 2010, Nwobodo assured the management of the NDIC, that the bank had concluded arrangements to open six offices in each of the geo-political zones of the country to facilitate interaction with depositors and verification of claims. This assurance gave hope to thousands of Nigerians that their trapped money since 2002 would be recovered.

In December 2012, the CBN stated that it would give loans to both SBN and Societe Generale Bank of Nigeria, SGBN, to enable both banks start operations. While the SGBN has commenced accounts verification and hopes to start banking services before the end of March, under a new name-Heritage Bank, the SBN is yet to take any step towards starting its operations.

Tokunbo Martins, CBN director of banking supervision, stated that the two banks would only get loans from the CBN after the fulfillment of certain conditions, such as the satisfactory risk management framework, evidence of good corporate governance and meeting the minimum recapitalisation requirement. It is alleged that the SBN is yet to meet these requirements.

Ugo Okoroafor, CBN director of corporate communications, has made it clear that the apex bank would only assist the SBN if it is able to meet certain conditions required of a national bank. “It was a court decision that Savannah Bank should be given its licence back. We are ready to assist the bank, but it is up to the owners to come up with a timeline to reopen,” he said.

Okoroafor said that the SBN could not be punished for the delay in starting operations because the judgment is clear that it was not the fault of the bank for the circumstances that led to the withdrawal of its licence. “This is a bank that was operating and had its licence revoked; and then, it went to court and the court reinstated it. The court did not say it is reinstated for a specific period,” he said.

Okoroafor explained that as far as the CBN was concerned, the SGN had not started operations. “We haven’t renewed the licence; when it meets the conditions, we will do that, but we are ready to assist it. If it is a bank that is in operation and collecting deposits from people and then falls short of certain conditions, you can now punish it for its inability to meet certain conditions,” he said.

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