21 May 2019

Nigeria: Shareholders Fume Over Huge Fines On Banks in 2018

Shareholders have bemoaned the huge fines slammed on Nigerian banks by the regulatory authorities as penalty for various contraventions during the 2018 financial year.

The disapproval comes as seven banks - GT Bank; Access Bank; United Bank for Africa (UBA); FBN Holdings; Sterling Bank; Fidelity Bank; and Zenith International Bank, all quoted on the Nigerian Stock Exchange (NSE), paid about N145 million in fines to regulators in 2018 for various offences.

The fines were paid to the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC), the Financial Reporting Council of Nigeria (FRC), and the Corporate Affairs Commission (CAC).

The shareholders therefore argued that these penalties impacted negatively on the bottom-line of the banks, and ultimately affected their dividend payout, and urged the regulators to work out other ways of sanctioning them.

A breakdown of the fines as contained in the banks' annual reports showed that FBN Holdings and its subsidiaries, First Bank of Nigeria, FBN Quest Merchant Bank and FBN Insurance Limited, paid the highest fine of N32.65 million to the CBN during the period under review, while UBA followed with N30 million.

Similarly, GTBank was fined N24 million; Access Bank N20 million; Sterling Bank N15.33 million, Fidelity Bank N13.01 million; and Zenith International Bank N10 million, respectively.

Rather than imposing such huge fines, the shareholders advised that regulators should instead meet with the banks' management to determine other penalising them.

The President of New Dimension Shareholders Association, Patrick Ajudua, in a chat with The Guardian said: "As shareholders, we are worried about this; not only does it affect dividend payment, it also has a negative effect on shareholders fund. We are not against payment of fines as it is a measure of correcting financial/governance breaches, but such must be done with human face. This means that the staff that committed the offence should be penalised. If this is done, it would forestall further violations and serve as a deterrent to others."

Agreeing, the President, Proactive Shareholders Association, Boniface Okezie said: "No doubt, it is affecting the shareholders dividend; it is really unfortunate. The regulators can work out other ways of punishing banks that contravene the law."

Similarly, the President, Shareholders Association of Nigeria, Ibadan Zone, Eric Akinduro said: "The question to ask is whether the penalty is part of the budget provision, if yes? It is ok, but if no, then the officer responsible for such an offence must be held accountable for the negligence.

"This is why shareholders should continue to put the board and management on their toes. If the game is played by the rules, there will not be any reason for contravention."

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