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Business News

FCMB has just lost a major ₦2.5bn case after a protracted trial

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Adamu Nuru, FCMB Managing Director

The protracted legal dispute between First City Monument Bank Plc and Valueline Securities and Investment Limited (a stockbroking firm) has finally been resolved by the Investment and Securities Tribunal.

The legal dispute, which was centered around the repayment of a controversial ₦2.5 billion shares purchase fund that was misappropriated by the now-defunct Finbank Plc, had been on since 2008. First City Monument Bank Plc had merged with Finbank in 2012.

Valueline Securities and Investment Limited had instituted the suit ten years ago, while implicating City Monument Bank Plc, the Securities and Exchange Commission, and the Central Bank of Nigeria.

Meanwhile, delivering the judgment in Abuja recently, the Investment and Securities Tribunal ruled that FCMB should pay the claimant some ₦988,533,205.86 in addition to accrued interest calculated at 18%, being repayment of an outstanding loan.

First City Monument Bank was also mandated to pay a penalty charge of about ₦500.000 which will go to the claimant as the cost of legal action. FCMB will also pay a 10% 10% interest on the judgment debt from the date of the judgment until final defrayment.

Background to the case

Valueline Securities and Investment Limited in 2008 paid the sum of ₦2.5 billion for the purchase of shares during a Finbank public offer. Unfortunately, the stockbroking firm was neither allotted the shares nor refunded the ₦2.5 billion; in line with capital market regulations.

Consequently, the claimant petitioned the Securities and Exchange Commission who investigated the matter and found the bank guilty, thereby ordering it to refund the money with 18% interest per annum; starting from the date of public offer till liquidation of same.

Following the bank’s failure to adhere to the ruling by SEC, the Central Bank of Nigeria had to intervene. This also happened to be the same time Finbank Plc and First City Monument Bank were finalising their agreement. FCMB agreed to offset the debt, provided that SEC would allow the merger to take place.

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However, when the bank failed to pay, the SEC sought the intervention of the CBN; coincidentally, at the time when the FCMB and Finbank were planning a merger. An All Parties Meeting (APM) was convened where the FCMB undertook to repay the indebtedness of Finbank and for its account with the CBN to be debited at source by CBN provided the merger of the two banks was approved by SEC to succeed.

The bank later claimed that it had paid the sum of ₦4.6 billion to the firm, said sum which included the initial ₦2.5 billion plus the accrued interest of ₦2.1 billion. The claimant, however, faulted the claim, saying that FCMB never really repaid the full debt.

In light of these developments, the Central Bank of Nigeria and the Securities and Exchange Commission formed a joint investigative team which “changed the original SEC computation formula for the repayment following a petition by FCMB Plc and without informing or involving the claimant.”

Meanwhile, in the latest ruling, the tribunal had tried to determine the following-

  • Whether FCMB has really complied with the directive to pay the debt
  • Whether FCMB is still indebted to the claimant and
  • Whether the claimant is entitled to the reliefs it sought in its originating application.

The tribunal, therefore, ruled in favour of the stockbroking firm, while nullifying CBN and SEC’s decision to change of the computation formulae.

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Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs.He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor.Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan.If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

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Business

FG explains why Lagos-Ibadan rail line was not linked to the sea

The government in its explanation said that the delay was due to disruption by trucks going in and out of the port complex.

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FG needs $656 million to complete Lagos-Ibadan railway project – Amaechi, Nigeria loses N150 billion annually to shipping tariffs, Ibadan to Kano rail construction

The Federal Government has stated why the China Civil Engineering Construction Company (CCECC) Nigeria Limited could not link the final part of the Lagos-Ibadan rail line to the sea.

The government in its explanation said that it was due to disruption by trucks going in and out of the port complex.

According to a press statement signed by the Director, Press and Public Relations of the Federal Ministry of Transportation, Eric Ojiekwe, this disclosure was made by the Minister of Transportation, Rotimi Amaechi, while on a routine tour of the Lagos-Ibadan rail line project on Saturday, April 10, 2021.

The Minister pointed out that the original blueprint for the Lagos-Ibadan rail line project was not adhered to by CCECC Nigeria Limited and TEAM consortium and therefore warned that the master plan of the soon to commence Ibadan-Kano rail line project should not be changed.

The statement from the ministry partly reads, “The Nigerian Government has restated its commitment to connect the whole country by rail with the soon to commence Ibadan-Kano Standard Gauge Rail project.”

Amaechi forewarned that the master plan of the soon to commence project should not be changed as the original blueprint for the Lagos-Ibadan wasn’t adhered to by Messrs CCECC Nigeria and TEAM consortium. The Minister who rode the train from Ebute-Meta to the 8.72 km Apapa Port Spur line, informed the media that the inability of Messrs CCECC Nigeria to link the final part of the rail line down to the sea is rather due to disruption by trucks going in and out of the port complex.’’

The Minister had noted that the Federal Government has paid its share of the counterpart funding of the Ibadan-Kano rail line project and is waiting for China-Exim bank to ratify its side of the agreement for the project to commence.

He also advised the Nigerian Railway Corporation (NRC) to acquire more land around the train stations and the rail tracks for future development adding that this will be near impossible to do in the future as whatever space available now would have been taken over by businesses attracted to the rail line.

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In case you missed it

It can be recalled that full commercial train services commenced on the Lagos-Ibadan rail line after train operations commenced on December 7, 2020, with only Lagos, Ibadan and Abeokuta residents enjoying the train services.

This is because other minor and major stations along that route were yet to be completed.

 

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Manufacturing

Industrial Index loses -12.39 points, as BUA and Lafarge Cement shares top losers list

The NSE Industrials index lost 12.39 index points in the first trading week in the month of April.

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Manufacturing: Activity levels pick up albeit readings still below water

The Nigerian Stock Exchange Industrial Index at the close of trading activities for the first week in the month of April closed on a bearish note, following a 0.66% decrease in the shares of BUA CEMENT and Lafarge.

At the close of trading activities on the Nigerian Stock Exchange on the 9th of April 2021, the industrial index depreciated by 55.01 index points, to close lower at 1,928.18 index points for the week.

When compared to the overall performance of the market, the NSE Industrial index underperformed, noting that the NSE All-Share Index and Market Capitalization depreciated by 0.66% to close the week at 38,866.39 and N20.3350 trillion respectively.

READ: COVID-19, VAT, FX scarcity adversely impacted our operations in 2020 – Nigerian Breweries boss says

What you should know

The NSE Industrial Index was designed to provide an investable benchmark to capture the performance of the Industrial Sector. It comprises the most capitalized and liquid companies in the industrial sector and is based on the market capitalization methodology.

The index tracks the performance of ten industrial companies on the Nigerian Stock Exchange which includes Dangote, BUA, and Lafarge Cement.

The overall performance of the companies for the week was bearish, as the index closed on a negative note driven by the decrease in the share price of BUA Cement and Lafarge.

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MEYER (19.51) was the only gainer for the week, while BUACEMENT (-1.09%) and LAFARGE WAPCO (-3.00%) were the only losers for the week.

GAINER

  • MEYER up by19.51% to close at N0.49.

LOSER

  • WAPCO down by -3.00% to close at N21.00.
  • BUACEMENT down by -1.09% to close at N72.70.

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