Central Bank of Nigeria, CBN, imposed fines of about N312 million on five Deposit Money Banks, DMBs, last year for various regulatory infractions, particularly those bordering on contraventions of the Banks and Other Financial Institutions Act (BOFIA).
The banks are Zenith Bank, GT Bank, First City Monument Bank (FCMB), Access Bank and Sterling Bank, were affected.
Of the lot, Access Bank was the worst hit by the penalties, paying a fine of N184 million for various contraventions of the BOFIA provisions during the year under review.
Specifically, the bank paid the fine for failure to obtain the apex bank’s approval for additions to investment in properties totaling N5.15 billion as well as non-compliance to implementation of the recommendations of a financial services provider, PricewaterhouseCoopers (PwC).
In addition, the bank was also sanctioned for contravening foreign exchange manual and weaknesses noticed in its internal control and know your customer procedures. Other infraction for which the bank was penalized was its contravention of the minimum documentation in the credit file and reporting of public sector deposit.
For Sterling Bank, a total fine of N50 million was paid for under reporting of public sector deposits as at Aug. 29, 2014, while Zenith Bank Plc was made to pay a fine of N48 million for non disclosure of date of last lodgment on credit print out, incomplete reporting of all transactions of politically exposed persons and appointment of a Deputy General Manager.
Similarly, the bank was also found wanting for incomplete reporting of international funds transfer, incomplete reporting of currency transactions and misclassification of some public sector deposit, among others.
The fourth bank in the order of sanctions was GT Bank which coughed out N24 million as fine for the appointment of some top management without the monetary authorities’ approva; as well as infraction arising from anti-money laundering/combating the financing of terrorism spot checks, among others.
The FCMB Group was penalised N6 million for not implementing prior year’s external auditors recommendations and failure to comply with ATM operation standards, amongst others
Reacting to the sanctions on the banks which he considered as shareholders’ losses in real terms, the President of Renaissance Shareholders Association, Ambassador Olufemi Timothy, described the development as ugly in terms of the depleting effects on shareholders’ funds in the banks as well as the nation’s financial system stability.
Timothy, during a telephone chat with our correspondent yesterday said shareholders had been worried over various fines being imposed by the CBN, describing some of them as not necessary.
However, he was particularly concerned about the banks managements’ need to comply with regulatory guidelines as the apex bank would not close its eyes to infractions whenever they are perpetrated by any of the banks.
Speaking in a similar tone, the National Coordinator of Pragmatic Shareholders Association, Mrs Bisi Bakare, believed that the CBN should caution the banks with queries some time rather than imposing fines that tend to continue to erode shareholders’ funds.
While agreeing on the need for proper regulation of the banks, Bakare explained that the banks’ managements also had it as corporate responsibility to obey the regulatory guidelines in order to ensure financial system stability.
Citing instances when some other banks had been fined with huge sums in the recent past to justify her stance, the Pragmatic Shareholders’ leader noted that it had become more imperative for the banks to avoid any dealings or acts that could undermine their investors expectations.
An industry analyst, who spoke on the condition of anonymity, confirmed that it was practically difficult for any of the banks without paying one fine of the other in a financial year as they tend to always want to cut the corners to make more profit.