The Nigerian Stock Exchange has fined seven financial institutions for not filing their financial results before the regulatory due date.
The affected banks are: First Bank, Wema Bank, Sterling Bank, Sovereign Trust Insurance, First City Monument Bank, Abbey Mortgage Bank, etc.
According to the listing rules provided by the stock exchange, companies are expected to submit their financial year-end result latest by 90 days after the end of each year.
Quarterly results are also expected to be submitted at most 60 days after the end of each quarter.
In its Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for Fiscal Years 2018/2019, the Central Bank of Nigeria threatened to remove the Chairman and Managing Director of any bank that fails to publish its financial results 12 months after the period under review ends.
The CBN also said it would bar the chief executive or his/her nominee from participation at the bankers’ committee and disclose the reason for such suspension.
As penalty for delaying their financial results, the institutions are expected to pay the following fines:
First Bank – N2.1 million; Abbey Mortgage Bank – N700,000; First City Monument Bank – N100,000; Sovereign Trust Insurance – N2.1 million; Sterling Bank – N1.3 million and fines Wema Bank – N800,000.
Recall that four commercial banks paid fines totaling N493.27 million in two years for contravening the Banks and Other Financial Institutions Act (BOFIA), thereby depleting the shareholders funds of the banks.
It was trailed by Access Bank which paid N133.48 million in all, N78 million in 2017 after paying about N55.48 million in 2016.
The FCMB Group paid a total of N117. 02 million, and N28.26 million in 2017, and N88.76 million in 2016.
Speaking on the various penalties, Prof. Uche Uwaleke, the Head of Banking and Finance Department,
Nasarawa State University Keffi, said banks contravene rules for obvious reasons.
Uwaleke said the benefits of contraventions outweighed the costs and as rational economic agents, the banks chose to be in breach and face the consequence which was a mere slap on the wrist.
On the way forward, he said that the apex bank should ensure that the cost of contravention was high enough to serve as deterrent.
According to him, enforcement of stiff penalties will surely reduce the propensity to flout regulations by the banks.
Mr. Moses Igbrude, General Secretary, Independent Shareholders Association of Nigeria, ISAN, said payment of penalties as a way of enforcing compliance with rules and regulations was disadvantageous to shareholders.
Igbrude said it was the duty and responsibility of the managements of the banks to comply with all the rules to avoid paying fines or penalties by employing compliance officers.
According to him, the compliance officers should be trained and equipped on how to monitor and supervise to ensure adherence to all rules to avoid payment of huge fines to the regulators.
“Where such officers fail in their duties, they should be made to pay such fines or penalties from their salaries,” he said.
Igbrude said the CBN and other regulators should not use money, fines or penalties as the only tools of ensuring compliance.
“They should not be seen as money mongers or using it as a major source of revenue to the detriment of shareholders.
“We shareholders will continue to engage management of banks on best ways to minimise or eliminate this challenge of compliance to rules and regulations,” he said.
Mr. Boniface Okezie, the National Coordinator, Progressive Shareholders Association of Nigeria, said that banks must do everything possible to avoid falling prey to Central Bank of Nigeria (CBN) sanctions.
Okezie said some of the contraventions would have been resolved administratively as against the depletion of shareholders and banks operational funds.
He said the managements of the banks should be made to pay the penalties but not at the expense of the shareholders.
Okezie said that the amount of money paid by banks for contravention was worrisome and regrettable, noting that shareholders suffer the consequences.
He called for the intervention of the Federal Government in order to protect the shareholders.
Meanwhile the banks had at their various Annual General Meetings (AGMs) assured shareholders that they would take necessary measures to avoid payment of penalties.
Mr Herbert Wigwe, the Group Managing Director (GMD), Access Bank told the shareholders that the bulk of the contravention was in respect of the Bank Verification Number (BVN) registration.
He assured the shareholders that the bank had strengthened the BVN registration process across all branches to avoid default.