By Nse Anthony-Uko
ABUJA, (Sundiata Post) — Succour came the way of depositors of the defunct Lead Merchant Bank as the Nigeria Deposit Insurance Corporation (NDIC) announced on Thursday it has secured a landmark judgement to the tune of N556.493 million in their favour.
According to the NDIC, of the 3,925 depositors of the bank as at its closure, it had settled only 3,510 depositors as at December 31, 2016; leaving 415 depositors yet to be settled till date.
This indicates that out of the N10.149 billion, which is the total amount of deposits at closure of the bank, it was yet to settle the sum of N13.764 million representing the outstanding insured claims and the sum of N1.583 billion representing the outstanding uninsured claims as at December 31, 2016. The judgement was delivered by Honourable Justice Ibrahim N. Buba of Federal High Court, Lagos in a matter instituted by First Bank of Nigeria over a claim of indebtedness by Lead Merchant Bank to the FBN prior to the revocation of the closed bank’s licence in 2006 by the Central Bank of Nigeria (CBN).
FBN had claimed in its suit before the court that the closed bank became indebted to it under a clearing and settlement banking transaction and that as at 9th March, 2006 when the bank’s licence was withdrawn, the indebtedness stood at N556.493 million. The applicant further claimed that the transaction was secured by an unregistered legal mortgage over Lead Bank’s property at No.1, Oladele Olashore Street, Victoria Island, Lagos and that the property was covered by a registered Deed of Assignment the originals of which the defunct Lead Bank deposited with the Applicant as security for the transaction.
Following the revocation of Lead Bank’s licence, FBN claimed that it approached and notified the NDIC of the indebtedness of the closed bank but that the corporation classified it as creditor’s claim which would only be considered after the claims of depositors had been fully settled. FBN was however not satisfied with the response and it approached the court, claiming amongst other reliefs, a declaration that FBN being an equitable mortgagee of the said property was entitled to an order of court to sell same and liquidate the outstanding indebtedness of the defunct bank in the sum of N556.49 million owed to it.
The NDIC on its part contended that it indeed recognised the FBN’s claim of N556.49 million indebtedness by the defunct bank, but that such a claim constituted creditor’s claim which could only be settled in strict compliance with the priority ranking of applicable Laws; and having gone through its records, the NDIC confirmed that it was yet to meet its entire obligation as a deposit guarantor by fully paying the depositors of the defunct Lead Merchant Bank.
In its judgement, the court held that FBN’s claim bordered on the priority of payment where a bank suspended payment or was unable to meet its obligations; this the court stated was settled by Section 54 of the Bank and Other Financial Institutions Act (BOFIA) Cap B3 Laws of the Federation of Nigeria 2004 which provides thus: “Where a bank is unable to meet its obligations or suspends payment, the assets of the bank in the Federation shall be available to meet all the deposit liabilities of the bank and such deposit liabilities shall have priority over all other liabilities of the bank.”