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Shareholders association threaten to sue banks, CBN over dividend payment stoppage. See details...

The Pragmatic Shareholders Association has said the Central Bank of Nigeria’s (CBN) recent policy directive, barring challenged deposit money banks from paying dividends was the worst blueprint toward internal economic growth.

The Association in a communiqué after its emergency meeting on Sunday in Abeokuta, Ogun, said the policy showcased the apex bank high level of incompetency in the management of the nation’s monetary policy and regulation of operating commercial banks.

In the communiqué signed by the association’s National Coordinator, Mrs Bisi Bakare, the shareholders group, accused the CBN board and management of high level complicity and sabotage in the recurring banks bad loans and its attendant negative impact on domestic savings through portfolio investments.

According to the communique, the apex bank owes it as a responsibility to Nigerians and the international community by publishing the profile of the loans defaulters and invoking the operating laws through the banks on all bad loans.

Lamenting the timing of the policy directives, just weeks to the release of the 2017 banks financial results, the association said that CBN short-circuits domestic investors’ paltry return on their investments.

The association also accused the CBN of playing the class game in most of their policies, stressing that outright barring of challenged banks from paying dividends amounts to shifting the blame to minority shareholders.

The communiqué said that the contentious banks bad loans were failure pointers to the collapsing state of the national financial regulatory institutions in the proactive management of the economy.

It also blamed the Securities and Exchange Commission (SEC) for abandoning and reneging in its corporate responsibilities towards investors.

It said the current focus on shareholders dividend toward bridging banks bad loans would not only impact negatively on the nation’s capital market but create an added impetus for individuals and corporate concerns to consciously default in their loans obligations.

The association also urged the National Assembly to intervene and protect the domestic investing public by calling the CBN to order in its kill-joy-policy directives.

The Bakare led group threatened to challenge the action of the CBN in the nation’s courts if the apex bank refuses to rescind the policy.

Nigerian pilot reports that the CBN recently stopped the payment of dividends to shareholders by deposit money banks and discount houses with huge bad loans, and a low capital base, due to the rising non-performing loan profile of a few institutions.

The directive came barely weeks before the release of annual reports for the 2017 financial year by the country’s commercial banks and discount houses.

The nation’s banks regulator, in a letter dated Jan. 31, said the move was aimed at stemming the tide of rising non-performing loans (NPLs), and the consequent weakening and erosion of the banks’ capital base.

According to Nigeria Deposit Insurance Corporation (NDIC), banks NPLs as of September 2017 had hit 15.18 per cent after rising 50 per cent to ₦2.4 trillion from ₦1.6 trillion in December 2016. (NAN)

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