SAVANNAH BANK: An ordeal of a Nigerian Financial Institution

SAVANNAH BANK: An ordeal of a Nigerian Financial Institution

Savannah Bank license was withdrawn in February 2002 in a decision many saw as politically motivated due to difference between the major share holder and Chairman of the Bank Senator Jim Nwobodo and Former President Olusegun Obasanjo at that time.

According to an online article;

"The fate that befell Savannah Bank seven years ago was a direct consequence of the executive capriciousness that pervades the Nigerian polity. No coherent reason was adduced for the high-handedness that had such far-reaching consequences for investors, creditors and depositors. The bank showed no obvious or remote signs of distress that could have precipitated its closure. The much that was disclosed was that the bank committed some infractions of extant regulations owing to its alleged non-professionalism in aspects of its operations." Further stating that "It is unconscionable that agencies of government would take such a punitive and malicious step that led to job losses, the freezing of depositor's funds and erosion of investor's capital. Such whim and crass display of insensitivity are veritable cautionary tales for investors who seek a predictable, stable and safe haven for the deployment of their capital. Gratifying as it is that the Appeal Court awarded N100 million damages against the CBN and NDIC, as against the N100 billion claims of Savannah Bank, the one abiding lesson to draw from the episode is the crying need for restraint in the exercise of the power of last resort by the regulatory authorities." - Proshare quoting a publication on the Guardian.

Reasons offered by the apex regulatory authority of the Nigerian banking sector, The Central Bank of Nigeria (CBN) were that the bank did not have enough assets to meet liabilities, did not comply with CBN obligations, and that the regulators had been unable to prevent further deterioration.

As at the time of this closure subsequent upon which the Nigerian Deposit Insurance Corporation (NDIC) took over as liquidator the Bank was among the top 10 Banks in Nigeria, had 140 Branches and 85,000 shareholders Nationwide with a capital of over N1 Billion and Hundreds of thousand as Depositors.

The license was restored in February 2009 after a protracted legal battle, 14 years after the withdrawal of their license by the Mr Joseph Sanusi led CBN, this Bank is yet to reopen and is not officially recognised by the regulatory authorities as a Bank in Nigeria.

An unknown Investor, International Resource Associates of London had acquired over 67% shares of the Bank in 1999 after which a new management board had been introduced in 2000.

With the 6 February 2009, Court of Appeal, sitting in Abuja order that the Bank be reopened and N100 million awarded as damages and the decision of CBN not to challenge the order re-opening Savannah Bank, Richard Abrahams of the Bank of America was appointed chairman of the interim Board of Directors.

To further complicate issues, Savannah Bank was given 18 months to raise the N25 billion mandatory capital base to enable it operate full commercial banking by the court which has long expired.

It was reported in February 2010 that the bank's owners might be trying to raise over N100 billion via an international private placement, and the bank was even ready to buy up non-performing branches of troubled banks across the country at that time.

More controversial is the fate of the depositors whom the CBN and NDIC has told that they are not responsible for them as it could be interpreted as contempt of Court if they go ahead with the initial arrangement to make payment to Depositors when they acted as liquidators.

Nobody can predict how or when this ordeal will end for all the stakeholders of this Bank.