[center]CBN sacks Spring Bank board[/center]

The Central Bank of Nigeria has sacked the board of the Spring Bank Plc following a festering crisis that tore the directors apart.

Already, about five of the 14 directors of the bank are said to be under investigation by the Economic and Financial Crimes Commission.

The CBN, in a letter by its Governor, Prof. Chukwuma Soludo, said the sack of the directors was “with immediate effect.”

A copy of the letter, dated June 5, 2007, was obtained by our correspondents on Sunday.

The letter reads, “Whereas the CBN is satisfied that Spring Bank Plc is in a grave situation, having become insolvent with grave negative shareholders’ fund contrary to prudential requirements stipulated by the CBN pursuant to the provisions of the Banks and Other Financial Institutions Act 1991, and the CBN Act 1991 as amended;

“Now, therefore, I, Prof. Soludo, Governor of the CBN, in exercise of powers conferred on me by Section 33 of the BOFIA Act 1991, as amended, hereby remove as directors of Spring Bank Plc, the persons whose names are specified in the schedule hereto with effect from the 5th day of June, 2007.”

The affected directors are Rev.Segun Agbetuyi (Chairman); Mr. Cosmos Maduka; Prof. Anya O. Anya; Chief Tony Ezenna, Chief Adebayo Adetunji; Chief Anthony A. Adeniyi; Chief Okechukwu C. Unegbu; and Sir Edwin Mmuoemenam.

Others are Mr. Muhammad Ibrahim Sani; Dr. O.B.A Kola-Daisi; Mr. Ifeatu C. Onejeme; Mr. Olabisi I. Afolabi; and Mr. Tolulope Fadahunsi.

However, the Managing Director of the bank, Mr. Mike Chukwu, escaped the CBN hammer, a move which has angered a faction of the dissolved board.

The Spring Bank was a last-minute alignment of six banks to beat the December 2005 banking consolidation deadline.

The banks are Citizens Bank; African Continental Bank; Guardian Express Bank; Omega Bank; Fountain Trust Bank; and Trans-International Bank.

The institutions came together under two groups - Citizens Bank Group, made up of CB, ACB and GEB; and Bank One Group, made up of the OB, FTB and TIB.

Sources at the Spring Bank said that the crisis reached a stage that the four executive directors were no longer on talking terms.

The sources said although, it had been difficult for the component banks to work together, what made the crisis to boil over was the discovery during post-merger adjustment exercise, that part of the capital claimed by each of the banks was inaccurate.

Citizens Bank Group had claimed a shareholders’ fund in excess of N17bn, while Bank One Group claimed N14bn.

It was based on such claims that they agreed to a 57:43 sharing arrangement in favour of the Citizens Bank Group during the merger.

However, following complaints especially by those from the Bank One Group, alleging inaccuracy in the recapitalisation process of the Guardian Express Bank Plc, a team of officials from the CBN and the Nigeria Deposit Insurance Corporation was sent to Spring Bank.

The team, the sources added, established that fraud was indeed, committed by some directors of the bank.

Sources said that the bid by Bank One Group to take control of the bank, by producing the managing director, had been stiffly rebuffed by the current managing director.

The CBN Governor had on February 5, 2007 met with the board of the Spring Bank, with a view to resolving the conflicts but there was no let- off by the contending interests.

The matter also received the attention of former President Olusegun Obasanjo administration through the intervention of the former Attorney-General of the Federation, Chief Bayo Ojo, SAN.

Acting on a petition on the matter, Ojo, in a letter to the Chairman of the bank, dated May 24, 2007, asked the directors to step down.

The letter reads in part, “This action is crucial for creating the required atmosphere in the bank that would make for preservation of factual information necessary for our effective prosecution of the said directors which will soon commence in earnest after detailed police investigation.”

They were given up to May 28, 2007 to comply.

Some of the directors of the bank are alleging bias on the part of the CBN for not removing Chukwu along with other directors.

Calls made to the telephone of the CBN Governor did not go through.

The spokesman for the bank, Mr. Festus Odoko, who confirmed that a meeting was held between the CBN and the board of the bank, however, could not give the details of the development.

Odoko said he was not around when the meeting took place last week.

He, however, promised to respond to our correspondents’ enquiries on Monday (today) after due consultations with the relevant authorities at the CBN.

A top official of the bank, who pleaded anonymity, said that what the CBN did could not be said to be an outright sack of the bank’s board.

He said that the bank was performing all its obligations , including its operations at the clearing house up till Friday.

According to him, most of the former directors relieved of their positions by the CBN last week, were aware of the CBN’s intervention. He wondered why they decided to cry foul when the final decision became operational.

sources ; http://www.proshareng.com/myproshare/portal_articles.php?id=1124