Daud Olatunji
Nine prominent Deposit Money Banks (DMBs) in Nigeria have collectively earmarked a staggering sum of N383.42 billion to settle potential legal claims arising from ongoing disputes with their customers, according to their annual financial reports filed with the Nigerian Exchange Limited.
Among the financial institutions involved are Access Holdings, FCMB, Sterling Financial Holding, Fidelity Bank, Wema Bank, Stanbic IBTC, Guaranty Trust Holding Company, Zenith Bank Plc, and United Bank for Africa Plc.
PLATFORM TIMES reports that the banks cited various legal disputes stemming from their regular business operations, including claims, lawsuits, and other proceedings related to alleged errors, omissions, and breaches.
While the directors express confidence that these disputes will not significantly impact the banks’ financial positions, monetary provisions have been set aside to address potential liabilities.
Notably, Stanbic IBTC Bank disclosed a total litigation claim of N12.43 billion, encompassing 416 cases with an aggregate value of monetary claims exceeding N275 billion, USD$4.46 million, and GB£74,284.64.
GTBank reported a provision of N9.1 billion for litigation claims from 1,060 cases, while FCMB Group and Access Bank disclosed losses of N6.33 billion and N3.46 billion, respectively, due to legal actions arising from their normal business operations.
Fidelity Bank allocated N1.19 billion, Wema Bank N1.14 billion, and Sterling Bank N10 million for legal dispute claims in their financial reports.
Zenith Bank, despite reporting a total loss of N33 billion within one year, reassured stakeholders that the estimated N1 trillion in claims against the Group would not materially affect its banking activities.
United Bank for Africa (UBA) reported an increase in legal cases from 1,422 in 2022 to 1,649 in 2023, with provisions totaling N320.12 billion for potential claims amounting to N986.247 billion. However, the directors remain confident that these cases will not result in significant liabilities beyond the provisions made in the financial statements.
The surge in reporting litigation claims by banks follows regulatory scrutiny by the Financial Reporting Council of Nigeria (FRC), which has threatened sanctions against companies concealing or underreporting the value of legal claims.
According to the FRC, such actions violate International Financial Reporting Standards (IFRS) and will result in penalties for accounting professionals or companies found in breach of governance codes.
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