Bank PHB's Suit Dismissed By Court

LAGOS— A Federal High Court sitting in Lagos, yesterday, dismissed the suit by Bank PHB against the Central Bank of Nigeria, CBN; Keystone Bank and Federal Government, challenging the revocation of its banking licence, and takeover of its assets by Nigeria Deposit Insurance Corporation, NDIC and Asset Management Corporation of Nigeria, AMCON.

Trial judge, Justice Charles Archibong, upheld the argument of counsel to CBN and that of the Federal Government, that the CBN acted within its powers under the CBN Act, and particularly section 53 of the Banks and Other Financial Institutions Act, 2004.

The Federal Government and CBN had argued that the persons suing had no authority of any of the organs of the Bank PHB (board or shareholders) to sue; and that NDIC and AMCON were omitted in the suit, when the plaintiff sought reliefs against them.

The court agreed with the argument of the defendants and observed that CBN licence was a creation of an Act of National Assembly, which empowers the CBN to intervene where it finds that depositors’ funds were in danger.

The court noted that documentary evidence available before it showed that Bank PHB had a non performance loan of N475 billion, with its liquidity ratio below 25 percent, adding that the bank indeed showed a sign of a failing bank, which was in dire need of capital and in contravention of the provisions of the Act.

The court said that it was unable to find that CBN acted beyond its powers or did not comply with the provisions of the law on revocation of banking licences of Bank PHB and consequently dismissed the contention that CBN Act of revocation was tainted with malice.

It added that “CBN cannot standby, once it is shown that depositors’ funds were in danger.”

Bank PHB's Suit Dismissed By Court