Seven retail
banks quoted on the Nigerian Stock Exchange (NSE) paid N144.99 million as fines
to regulators in 2018 for various contraventions.
Investigations showed that the fines were paid to the Central Bank of Nigeria
(CBN), the Securities and Exchange Commission (SEC), the Financial Reporting
Council (FRC), and Corporate Affairs Commission (CAC).
The affected banks are: Sterling Bank, United Bank for Africa (UBA), Zenith
International Bank, GT Bank, Access Bank, FBN Holdings and Fidelity Bank.
A breakdown of the figure 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 during
the period under review.
UBA came second having paid N30 million to the apex bank for various offences.
Similarly, GTBank was fined N24 million during the period under review, while
Access Bank paid N20 million.
Sterling Bank, Fidelity Bank and Zenith International Bank paid N15.33 million,
N13.01 million and N10 million, respectively for various offences during the
review period.
Commenting on the contraventions, Prof. Sheriffdeen Tella of Economics
department, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, said the
preference of banks to pay penalty instead of complying with CBN directive was
an age-long problem.
Tella said, “Banks weigh the cost of complying against paying penalty and
decide to pay if the former is quite high.”
“There was a time the banks would prefer to pay penalty than lend to the
agriculture sector because of the failure of many farmers to pay back due to
bad weather, long gestation period and possibly mismanagement,” he added.
Tella also attributed the development to delay in responding to requests by
some banks due to unnecessary bureaucratic measures.
“Increasing the contravention fee may not be helpful but a meeting of the
stakeholders in the banking sector arranged by the CBN should also be helpful,”
he noted.
Mr Moses Igbrude, Publicity Secretary, Independent Shareholders Association of
Nigeria, said shareholders were not comfortable with the various fines paid by
the financial institutions.
Igbrude said no company would decide to break the law in order to pay
penalties.
“I don’t think any public company will deliberately flout the law in order to
pay penalties unless such act must have brought some unseen benefit.
“Otherwise why would management do that when they know the reputational risk
associated with it and queries from shareholders at Annual General Meeting?
“We shareholders are not happy about these payments and we have been advocating
that companies should employ compliant officers to monitor all regulatory
requirements to avoid penalties and if such officers fail they should be the
ones to pay the penalties for negligence.
“It seems regulators prefer to punish the corporate bodies instead of the
officer who fail to perform his or her duty to detriment of the shareholders.
“They should use stigmatisation and reputational risk approach by classifying
such management non-compliant management,” Igbrude stated.
Malam Shehu Mikail, National President, Constance Shareholders Association of
Nigeria, blamed the shareholders for not asking the companies they invest in
necessary questions.
“We shareholders have a lot to do and our regulators should also take a
proactive approach and decide on any petition ever made to them by minority
shareholders,” Mikail said.
He said companies should do the needful by doing things at the appropriate time
and as well follow due process by adhering to rules and regulations to avoid
unnecessary fines. (NAN)
