Abuja - Nigeria’s central bank rejected a request by the country’s Financial Reporting Council to take disciplinary action against Standard Bank Group’s local unit after the FRC said the lender had made material misstatements in its financial accounts and recommended a fine.
The FRC didn’t follow due process and the central bank is “unable to accede to your request to take disciplinary action against” Lagos-based Stanbic IBTC Holdings, Governor Godwin Emefiele said in letter dated November 2 obtained by Bloomberg and confirmed on Wednesday by central bank spokesman Ibrahim Mu’azu.
“We are seriously concerned that such a drastic regulatory decision could be taken on an entity under the regulation and supervision of the Central Bank of Nigeria without any form of consultation of the bank.”
The FRC on October 26 suspended the registration to sign off on financial statements of four past and current Stanbic officials, including Chief Executive Officer Sola David-Borha and Chairman Atedo Peterside. The issue under dispute is how to account for cross-border payments, according to Johannesburg- based Standard Bank, the continent’s largest lender by assets, which said Stanbic has been treating payments to units of the lender in other African countries as liabilities.
The central bank “does not see any reason to advise or compel” Stanbic to obey the FRC’s rulings, Emefiele said in the letter. The manner of the regulator’s announcements and actions has the ability to erode investor confidence, Emefiele said, noting the 18 percent drop in Stanbic’s share price since October 26.
Stanbic’s proposed sale of 800 million shares had also been suspended by the Nigerian Securities Exchange Commission over the FRC investigation into the company’s financial statements. The bank had announced plans in May to raise 24 billion naira ($121 million) of equity, which was approved a month later.
Standard Bank said in a statement on Wednesday it received a copy of Emefiele’s letter and welcomed the central bank’s intervention.
- With assistance from Elisha Bala-Gbogbo in Abuja.
BLOOMBERG