Investigation Reveals: Bank CEOs Granted N549 Billion In Insider Loans Within Five-Year Span

Investigation Reveals: Bank CEOs Granted N549 Billion In Insider Loans Within Five-Year Span....KINDLY READ THE FULL STORY HERE▶

Directors and key management personnel of Deposit Money Banks (DMBs) have reportedly borrowed approximately N549 billion from their respective financial institutions over a five-year period. This analysis is based on The PUNCH’s examination of annual reports submitted by the banks to the Nigerian Exchange Limited between 2019 and 2023.

However, there has been a significant decrease in loans and advances to directors and key management personnel, as well as related party transactions, in 2023. These transactions reduced to N52.40 billion across eight financial institutions, marking a 52.92% decline compared to N111.31 billion in 2022.

The financial institutions reviewed in the 2023 analysis include Access Holdings, Guaranty Trust Holding Company Plc, Zenith Bank Plc, United Bank for Africa, Fidelity Bank, Wema Bank, Stanbic IBTC Holding Plc, and the FCMB Group.

This decline coincides with the implementation of new corporate governance guidelines by the Central Bank of Nigeria (CBN) effective from August 1, 2023. These guidelines, outlined in a circular dated July 13, 2023, impose responsibilities on bank boards and executive compliance officers, superseding previous codes, circulars, and directives.

The CBN guidelines on related party transactions emphasize the establishment of policies concerning insider trading and related party transactions by directors, senior executives, and employees. These policies are to be published on the banks’ websites and should include appropriate standards and procedures for effective implementation. Additionally, internal review mechanisms conducted by the internal audit function of the bank are required to assess compliance and policy effectiveness.

Furthermore, the guidelines stipulate that directors whose facilities or those of their related interests remain nonperforming in any financial institution for more than one year shall cease to be on the bank’s board and shall be blacklisted from sitting on the board of such bank or any other financial institution under the CBN’s purview. The guidelines also require prior CBN approval for the writing off of director-related loans or interest thereon.

For more information join our WhatsApp group by clicking the link here: WhatsApp Group Invite