The Nigerian government, in an unprecedented move, has assumed control of three prominent commercial banks: Union, Polaris, and Keystone. This drastic action follows the Central Bank of Nigeria’s (CBN) dissolution of their management and boards due to serious regulatory non-compliance and corporate governance failures.

According to Hakama Sidi Ali, Acting Director of Corporate Communications at the bank, the decision was crucial owing to the banks’ repeated failures to adhere to key provisions of the Banks and Other Financial Institutions Act, 2020. This includes regulatory non-compliance, governance lapses, and activities threatening financial stability.

The CBN will officially notify the banks today and is expected to promptly appoint interim management and boards to avoid operational disruptions. Sources indicate that these appointments were being finalized last night.

A report by Special Investigator Jim Obazee revealed the alleged acquisition of these banks by the former CBN governor, Godwin Emefiele. However, insiders assert that the takeover serves the industry’s best interests, aiming to quash speculation, restore governance, and reposition the banks.

This decisive step followed an extensive meeting of the Committee of Governors (CoG), including CBN Governor Yemi Cardoso and his deputies, with President Bola Tinubu’s swift approval. This move was deemed necessary despite the CBN’s authority under the Banks and Other Financial Institutions Act (BOFIA) to act independently in cases of governance failure.

The financial sector reeled from this news, with panic setting in among the management of the affected banks. A senior bank executive shared their anxious anticipation for official communication as the situation remained speculative.

An insider revealed that the president’s approval, though not mandatory, was sought to ensure due process, highlighting the CBN’s commitment to transparency.

This action is the culmination of investigations led by Obazee, who was appointed in July 2023 to scrutinize the CBN and related entities. His findings questioned the transparency of Union Bank’s acquisition by Titan Trust Bank and recommended government intervention.

Investigations uncovered Emefiele’s alleged role in using Dubai-based entities for the formation of Titan Trust. The report also noted the lack of physical presence of these companies in Dubai, contrary to acquisition claims.

This takeover, a result of the banks’ refusal to cooperate with the investigation, marks a significant shift in Nigeria’s approach to banking regulation and governance.