…. How Court cases stalls the bank’s commitment and progress.
With 415 litigation cases hanging around its neck, Stanbic IBTC has stated that its exposure has come up to more than N268 billion in addition to other large foreign currencies in contingent liabilities at the end of the first quarter of 2024.
The Group litigation portfolio as at 31 March 2024 consisted of 415 cases and aggregate value of monetary claims against the Stanbic IBTC Group was N268,273,907,895.42 USD$4,468,675.78 and £74,284.64.
On Monday, Stanbic said the group would have a date in court with the Asset Management Corporation (AMCON) for debiting its account with the apex bank.
In the note to its account for the period, Stanbic Bank said it had in December 2012 entered into an agreement with AMCON to purchase the Eligible Assets (non-performing loan) of a client, which the Bank had classified as “doubtful”.
The financial services group said AMCON confirmed its willingness to purchase the proposed Eligible Assets at a total consideration of about N10 billion, which sale/purchase was concluded in December of 2012.
As a precondition for the sale, Stanbic IBTC said AMCON unequivocally stated that the pricing of the Eligible Bank Assets was subject to adjustment within twelve (12) months in line with the bad asset buyer’s guidelines after due diligence on information the Bank had supplied to AMCON.
According to the explanatory, AMCON by a letter dated October 4, 2017 informed the Stanbic Bank of its intention to reprice the loan and claw back the sum of N5.7 billion, being what was alleged to be excess overpaid consideration, as a result of what was felt was an overvaluation.
Details obtained from its regulatory filling reads that the Bank in its response, emphatically denied the allegations and provided evidence to AMCON to the contrary. The Bank noted that AMCON’s attempt to reprice the sold Assets, were outside the 12-month claw-back period provided in AMCON’s guidelines.
Notwithstanding all the clarifications made by the Bank, AMCON proceeded to apply to the Central Bank of Nigeria (CBN) to debit the Bank’s account with the sum requested to be clawed back, plus possible accrued interest.
Sequel to this, the CBN wrote to Stanbic IBTC on 31 July 2019, informing the Bank of AMCON’s request to debit the Bank’s account. Accordingly, the Bank instructed its lawyers to institute a Legal action against AMCON, pursuant to which it obtained an interim injunction (ex-parte), restraining AMCON and the CBN from debiting its Account for the alleged claw-back sum.
However, the Bank subsequently discovered that AMCON had earlier filed a suit at the Federal High Court, Lagos Division on the same subject matter. Consequently, the Bank discontinued its suit against AMCON and filed a Counter-Claim against AMCON in its suit. It said the case is currently adjourned to 29 April 2024 for settlement of issues.
“The claims against the group are generally considered to have a low likelihood of success and the group is actively defending same. Management believes that the ultimate resolution of any of the proceedings will not have a significantly adverse effect on the group.
“Where the group envisages that there is a more than average chance that a claim against it will succeed, adequate provisions are raised in respect of such claim”, the Bank said in its unaudited report for Q1-2024 explanatory note. #415 Cases: Stanbic IBTC Litigation Portfolio Grows to N268bn Naira Suffers Big, CBN Goes Ballistic Against FX Whales.
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