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Savannah Bank: Dead or Alive?

The decision of the Central Bank of Nigeria (CBN) not to appeal the judgment of Court of Appeal restoring the operating licence of Savannah Bank of Nigeria Plc opened the way for the return of the bank. It also signals the end of one of the controversial chapters in the history of banking in Nigeria.

However, the N25 billion capitalisation requirement for banks has become an albatross on the neck of the bank.

The CBN as a responsible and law abiding corporate body, which earnestly believes in the rule of law and moreso, in the overriding interest of the suffering depositors, whose funds have been trapped in the past seven years, has decided not to appeal the judgment of the court and would therefore restore the operating licence of the bank.”

The above statement from the Central Bank of Nigeria (CBN) was the clincher that effectively ended the seven-year saga and bitter litigations between the owners of Savannah Bank Plc and the CBN and NDIC on the other hand.

With the apex regulatory body in the banking industry shying away from further litigation on the matter, the door was therefore left wide open for Savannah Bank to resurrect from the dead and continue in business.

To further affirm that the seven-year siege on Savannah Bank was over, the CBN urged “the managers of Savannah Bank Plc to take all necessary measures to re-open the bank to the public as soon as possible.”

The Saving Grace
The saving grace for Savannah Bank was the February 5, 2009 judgment of the Court of Appeal, Abuja delivered in Abuja by Justice U. M. Abba’aji which declared the revocation of the bank’s operating licence on February 18, 2002 by the CBN and sealing of its premises nationwide by the NDIC as malicious and done in bad faith. She thereafter ordered both CBN and NDIC to pay damages worth N100 million to Savannah Bank.

The Road to Golgotha
The Road to Golgotha for Savannah Bank Plc began in 2002. The morning of February 18, 2002 seemed like any other day of business for the management, staff and customers of Savannah Bank of Nigeria Plc across the country. They were busy transacting business oblivious of the impending doom hatching in Abuja.

However, by mid-morning, a terse statement from the Central Bank of Nigeria (CBN) revoking the operating licence of Savannah Bank took the management of the bank by surprise. Shock soon turned into anxiety as the odious news soon filtered into the banking halls and town and customers began to disappear into thin air.

Both the CBN and Nigeria Deposit Insurance Corporation (NDIC) which subsequently sealed the premises of the bank nationwide following the announcement from the apex bank, hinged their action on alleged insolvency of Savannah Bank.

Specifically, the CBN and NDIC accused Savannah Bank of breaching certain provisions of banking regulations.

The Savannah Bank Story
When Savannah Bank of Nigeria Plc was incorporated in August 1960 and listed on the floor of the Nigerian Stock Exchange (NSE) in 1985, the founding fathers probably did not envisage that their prized investment and possession would be struck off the register of banks in Nigeria in 2002 and remain clinically dead until February 2009 after seven years of diligent litigation through the hallowed temples of the judiciary.

At the time its operating licence was revoked by the Central Bank of Nigeria (CBN) under the leadership of Chief Joseph Sanusi, then Governor of the CBN, Savannah Bank ranked as one of the 10 largest banks in Nigeria.

What Happened?
The sudden revocation of the licence of Savannah Bank by the CBN and swift sealing of its premises nationwide by the NDIC gave rise to widespread speculations in the market and across the country that a mysterious hand was behind the decision.

Such rumours were quickly reinforced by the opinion of market analysts who said the bank did not exhibit any sign of distress or insolvency to justify the clampdown. And within days and weeks, the polity was awash with allegations that Savannah Bank was indeed the victim of a power-game tussle between two political gladiators who had fallen apart.

The Political Calculation
Did politics actually played a role in the saga of Savannah Bank? Or was the allegation one of the usual tricks by the political class to gain cheap mileage on the political terrain?

The rumour mill had it that the bank was ‘dealt with’ by former president Olusegun Obasanjo to get a Pound of Flesh from Senator Jim Nwobodo who owned a sizeable equity in the bank and had fallen out of favour with the Gods at the ruling Peoples Democratic Party (PDP).

Despite spirited denials by the CBN and NDIC that the action against Savannah Bank was purely on professional grounds, the allegation stuck like glue on the former president.

What better way to dismantle Nwobodo and bring him down to earth than to disable his economic empire as represented by Savannah

The Litigations
As expected, the revocation of the licence of Savannah Bank attracted an immediate response from the Board and Management of the bank in form of court action (See Litigations Table) to reverse the order.

For seven years, the owners of Savannah Bank traversed the various courts in the land-from High Court to Federal High Court and the Court of Appeal in search of justice that came unexpected on February 5, 2009.

Ruling By Justice Okechukwu Okeke ( March 4, 2002)
• That Order of mandatory injunction is issued directing the Defendants/Respondents to unseal forthwith the Plaintiff/Applicants premises throughout Nigeria and revert to the status quo ante bellum by the 1st Defendant/Respondent restoring forthwith the Plaintiff/Applicants banking license pending the determination of the suit.

• That the plaintiff/applicant is to give an undertaking as to damages should it turn out that this order ought not to have been made.

• That accelerated hearing of the substantive suit is hereby ordered. To this end the 1st defendant/ respondent is ordered to file and serve its statement of defence on the plaintiff/applicants and the 2nd defendant/respondent on or before March 8, 2002 and the hearing of the substantive suit is adjourned to March 11-14, 2002.

Justice Okeke submitted that “the court has a duty to protect the interest of the applicants, customers and also there is nothing before the court to show any complaint by their customers that they were unable to cash their cheques.”

Reaction by Savannah Bank
Mr. Ndubuisi Onwubiko, then Managing Director of Savannah Bank Plc hailed the Okeke ruling as a landmark decision and a firm reassurance that the judiciary remains the last hope of the common man and the oppressed in the country.

However, officials of Savannah Bank who moved to re-open the premises of the bank as a result of the ruling were shocked to see the entire place occupied by security agents who insisted that they were yet to receive orders from the Inspector-General of Police (IGP) to vacate the premises of the bank.

Reactions From CBN and NDIC
The ruling by Justice Okeke drew fire from the CBN which quickly filed an appeal at the Court of Appeal, Abuja and notified the Federal High Court. The apex bank also filed a motion for Stay of Execution to the Federal High Court pending the determination of its appeal.

The NDIC said the judge erred in law “when he ordered the defendants to unseal and vacate the premises of the plaintiff when the same Federal High Court sitting in Lagos on an application appointed the second defendant (NDIC) a provisional liquidator which appointment is still extant.

Mr. Tony Ede, then spokesman of the CBN issued a statement saying the CBN in conjunction with the NDIC “took “all necessary steps and have appealed these decisions and prayed the court for a stay of execution of the orders of the court until the issues of the appeal and the application for stay of execution are determined, the revocation order and the sealing of the premises of Savannah Bank remains.”

Brief Overview & Timelines of The Two Litigations

Feb. 15, 2002: The Central Bank of Nigeria (CBN) revoked the banking licence of Savannah Bank Nigeria Plc.

Feb. 18, 2002: The Corporation filed a petition for winding up the affairs of the bank and obtained ex parte, an order of appointment as Provisional Liquidator of the bank.

Feb. 21, 2002: The bank vide a Motion on Notice applied for an order discharging and/or vacating the appointment of the Corporation as

Provisional Liquidator on the ground that the appointment was contrary to the Companies Winding Up Rules.

March 21, 2002: Counsel to the bank argued the bank’s application for an order discharging and/or vacating the appointment of NDIC as Provisional Liquidator.

March 28, 2002: Counsel to the Petitioner continued with his reply but could not conclude. April 2, 2002: Counsel to the Petitioner concluded his arguments in response to the banks’ application to set aside the appointment of NDIC.

April 24, 2002: Counsel to the bank replied on points of law and the case was adjourned for Ruling. May 2, 2002: The FHC refused
to grant their application to set aside the appointment. The motion was accordingly dismissed.


Feb. 18, 2002: The bank filed an application for an order of Mandatory Injunction to restrain the Corporation and for parties to revert to status quo ante bellum. Feb. 21, 2002: The Court heard arguments on the bank’s application for order of injunction, amendment of Statement of Claim and accelerated hearing.

March 4, 2002: The FHC granted the bank’s application and issued an order of Mandatory Injunction, wherein it ordered the restoration of the bank’s licence and directed the Corporation to unseal forthwith the bank’s premises nationwide and to revert to status quo ante bellum.

“CBN & NDIC appealed to the Court of Appeal, Abuja. March 7, 2002: Court of Appeal, Abuja granted interim ex parte order staying all actions before the trial Court.

May 6, 2002: The Court of Appeal heard and disposed of all preliminary issues to pave way for an early determination of the substantive appeal.

May 9, 2002: The Court of Appeal heard the substantive appeal and reserved judgment on a date to be communicated. July 18, 2002: The Court of Appeal delivered its judgment and unanimously allowed the Corporation’s appeal, set aside the orders of the trial Court and ordered accelerated hearing of the case by another Judge. The bank subsequently filed an application at the Court of Appeal.

July 19, 2002: The bank appealed to the Supreme Court and applied for stay of execution and injunction pending appeal for stay of execution of the appellate court’s judgment and for an injunction against the Corporation.

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