By Mbakaan kwen, Abuja
The Nigeria Deposit Insurance Corporation (NDIC) has secured a landmark judgement to the tune of N556,493,034.16 (Five Hundred and Fifty-Six Million, Four Hundred and Ninety-Three Thousand, Thirty-Four Naira and Sixteen Kobo Only) in favour of depositors of Lead Merchant Bank Limited (in-liquidation).
In a press release signed by the head, communication and public affairs, H.S Birchi, the judgement was recently delivered by Honourable Justice Ibrahim N. Buba of Federal High Court, Lagos in a matter instituted by First Bank of Nigeria Plc 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.
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to it under a clearing and settlement banking transaction and as at 9th March, 2006 when the bank’s licence was withdrawn, the indebtedness stood at N556,493,034.16. The claim added that the transaction was secured with the defunct bank’s property as security for the transaction.
However, NDIC identify the claim as creditor’s claim which would only be considered after the claims of depositors had been fully settled. With this assessment, FBN approached the court with a claim of being equitable mortgagee of the said property and was entitled to an order of court to sell same and liquidate the outstanding indebtedness of the defunct bank in the sum of N556,493,034.16 owed it.
NDIC contended that out of a total of 3,925 depositors at closure of the bank, it had settled only 3,510 depositors as at December 31, 2016 leaving 415 depositors yet to be settled till date. It claimed the sum of N13,764,579.23 representing the outstanding insured claims was yet to be settled.
In its judgement, the court stated 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.”
The court therefore dismissed the applicant’s suit as lacking in merits, and awarded the cost of N250,000 in favour of NDIC.