NIGERIAN BANKING LAW REPORTS [2002 – 2004] VOLUME 11 (PART II) To be cited as: [2002 – 2004] 11 N.B.L.R. (PART II) Nigeria Deposit Insurance Corporation Nigeria Deposit Insurance Corporation Plot 447/448 Airport Road Central Business District P.M.B. 284, Garki Abuja, Federal Capital Territory [FCT] Nigeria Tel: +23495237715-6, +523696740-44 Members of the LexisNexis Group worldwide South Africa LexisNexis Durban 215 Peter Mokaba Road (North Ridge Road), Morningside, 4001 Johannesburg First Floor, 25 Fredman Drive, Sandton, 2196 Cape Town Office Floor 2, North Lobby, Boulevard Place, Heron Close, Century City, 7114 www.lexisnexis.co.za Australia LexisNexis, CHATSWOOD, New South Wales Austria LexisNexis Verlag ARD Orac GmbH & Co KG, VIENNA Benelux LexisNexis Benelux, AMSTERDAM China LexisNexis, BEIJING Canada LexisNexis Butterworths, MARKHAM, Ontario France LexisNexis SA, PARIS Germany LexisNexis Germany, MÜNSTER Hong Kong LexisNexis, HONG KONG Hungary HVG-Orac, BUDAPEST India LexisNexis Butterworths Wadhwa Nagpur, NEW DELHI Ireland Butterworths (Ireland) Ltd, DUBLIN Italy Giuffrè Editore, MILAN Japan LexisNexis, TOKYO Korea LexisNexis, SEOUL Malaysia LexisNexis, KUALA LUMPUR New Zealand LexisNexis, WELLINGTON Poland LexisNexis Poland, WARSAW Singapore LexisNexis, SINGAPORE United Kingdom LexisNexis Butterworths, LONDON USA LexisNexis, DAYTON, Ohio © 2009 Nigeria Deposit Insurance Corporation, published by LexisNexis (Pty) Ltd under licence ISSN 1595-1030 All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including electronic, mechanical, photocopying and recording, without the written permission of the copyright holder, application for which should be addressed to the publisher. Such written permission must also be obtained before any part of this publication is stored in a retrieval system of any nature. Whilst every effort has been made to ensure that the information published in this work is accurate, the editors, publishers and printers take no responsibility for any loss or damage suffered by any person as a result of the reliance upon the information contained therein. Printed and bound by Interpak Books Pietermaritzburg EDITORIAL BOARD 1. Professor J.O. Anifalaje Chairman Faculty of Law, University of Ibadan 2. Alheri Bulus Nyako Editor-in-Chief Board Secretary/Director, Legal Department N.D.I.C. 3. Michael Olufemi Olaitan Member Legal Practitioner 4. Ahmed Almustapha Member Registrar-General Corporate Affairs Commission 5. Gabriel Olukayode Kembi Member Legal Practitioner 6. Adekunle Oladapo Omowole Member Legal Practitioner Corporate Affairs Commission 7. Nasiru Tijani Member Legal Practitioner Senior Lecturer, Nigerian Law School 8. Belema A. Taribo Member Legal Practitioner N.D.I.C. 9. Moses Ter-llumun Adaguusu Member Legal Practitioner Corporate Affairs Commission 10. Dan Ike Agwu Secretary Legal Practitioner N.D.I.C. iii LIST OF JUSTICES OF THE SUPREME COURT OF NIGERIA AS AT 30TH NOVEMBER, 2007 1. HON. JUSTICE IDRIS LEGBO KUTIGI, CON (Chief Justice of Nigeria) 2. HON. JUSTICE SYLVESTER UMARU ONU, CON 3. HON. JUSTICE ALOYSIUS IYORGYER KATSINA ALU, CON 4. HON. JUSTICE NIKI TOBI, CON 5. HON. JUSTICE DAHIRU MUSDAPHER, CON 6. HON. JUSTICE GEORGE ADESOLA OGUNTADE, CON 7. HON. JUSTICE SUNDAY AKINOLA AKIN- TAN, CON 8. HON. JUSTICE ALOMA MARIAM MUKHTAR, CON 9. HON. JUSTICE MAHMUD MOHAMMED, CON 10. HON. JUSTICE WALTER SAMUEL NKANU ONNOGHEN, CON 11. HON. JUSTICE IKECHI FRANCIS OGBUAGU, CON 12. HON. JUSTICE FRANCIS FEDODE TABAI, CON 13. HON. JUSTICE IBRAHIM TANKO MUHAM- MAD, CON 14. HON. JUSTICE PIUS OLAYIWOLA ADEREMI, CON 15. HON. JUSTICE CHRISTOPHER MITCHELL CHUKWUMA-ENEH, CON iv SENIORITY LIST OF JUSTICES OF THE COURT OF APPEAL AS AT 30TH NOVEMBER, 2007 1. HON. JUSTICE UMARU ABDULLAHI, CON (President) 2. HON. JUSTICE ISA AYO SALAMI, (OFR) 3. HON. JUSTICE JAMES OGENYI OGEBE, (OFR) 4. HON. JUSTICE RABIU DANLAMI MUHAM- MAD, (OFR) 5. HON. JUSTICE RAPHAEL OLUFEMI ROW- LAND, (OFR) 6. HON. JUSTICE MUHAMMAD S. MUNTAKA COOMASSIE 7. HON. JUSTICE DALHATU ADAMU, (OFR) 8. HON. JUSTICE BABA ALKALI BA’ABA 9. HON. JUSTICE SAKA ADEYEMI IBIYEYE 10. HON. JUSTICE ZAINAB ADAMU BUL- KACHUWA 11. HON. JUSTICE SULEIMAN GALADIMA 12. HON. JUSTICE VICTOR AIMEPOMO O. OM- AGE 13. HON. JUSTICE JOHN AFOLABI FABIYI 14. HON. JUSTICE KUMAI BAYANG AKAAHS 15. HON. JUSTICE OLUFUNLOLA OYEOLA ADEKEYE 16. HON. JUSTICE M. DATTIJO MUHAMMAD 17. HON. JUSTICE AMIRU SANUSI 18. HON. JUSTICE CLARA BATA OGUNBIYI 19. HON. JUSTICE ISTIFANUS THOMAS 20. HON. JUSTICE JAFARU MIKA’ILU 21. HON. JUSTICE AMINAT ADAMU AUGIE 22. HON. JUSTICE ABUBAKAR ABDULKADIR JEGA 23. HON. JUSTICE STANLEY SHENKO ALAGOA v [2002 – 2004] 11 N.B.L.R. (PART II) Nigerian Banking Law Reports 24. HON. JUSTICE MONICA DONGBAN- MENSEM 25. HON. JUSTICE NWALE SYLVESTER NGWUTA 26. HON. JUSTICE MOHAMMED LAWAL GARBA 27. HON. JUSTICE JEAN OMOKRI 28. HON. JUSTICE TIJANI ABDULLAHI 29. HON. JUSTICE UWANI M. ABBA AJI 30. HON. JUSTICE MARY PETER ODILI 31. HON. JUSTICE KUDIRAT M.O. KEKERE- EKUN 32. HON. JUSTICE MOHAMMED LADAN TSAMIYA 33. HON. JUSTICE RAPHAEL CHIKWE AGBO vi SENIORITY LIST OF JUSTICES OF THE FEDERAL HIGH COURT OF NIGERIA AS AT 30TH NOVEMBER, 2007 1. HON. JUSTICE R.N. UKEJE (Chief Judge) 2. HON. JUSTICE A. MUSTAPHA 3. HON. JUSTICE D.D. ABUTU 4. HON. JUSTICE I.N. AUTA 5. HON. JUSTICE M.A. EDET 6. HON. JUSTICE A.A. ABDU-KAFARATI 7. HON. JUSTICE SOBA 8. HON. JUSTICE O.J. OKEKE 9. HON. JUSTICE S. YAHAYA 10. HON. JUSTICE A. BELLO 11. HON. JUSTICE A.O. AJAKAIYE 12. HON. JUSTICE F.F. OLAYIWOLA 13. HON. JUSTICE ADAMU HOBON 14. HON. JUSTICE J.T. TSOHO 15. HON. JUSTICE S.J. ADAH 16. HON. JUSTICE CHUKWURA NNAMANI 17. HON. JUSTICE R.O. NWODO 18. HON. JUSTICE G.C. OKEKE 19. HON. JUSTICE G.K. OLOTU 20. HON. JUSTICE J.E. SHAKARHO 21. HON. JUSTICE L. AKANBI 22. HON. JUSTICE C.M. OLATOREGUN 23. HON. JUSTICE BINTA F.M. NYAKO 24. HON. JUSTICE A. LIMAN 25. HON. JUSTICE S. YAHUZA 26. HON. JUSTICE C. ARCHIBONG 27. HON. JUSTICE I. EJIOFOR 28. HON. JUSTICE A.I. CHIKERE 29. HON. JUSTICE M.L. SHUAIBU 30. HON. JUSTICE SALIU SAIDU vii [2002 – 2004] 11 N.B.L.R. (PART II) Nigerian Banking Law Reports 31. HON. JUSTICE G.O. KOLAWOLE 32. HON. JUSTICE A.O. FAJI 33. HON. JUSTICE B. BELLO ALIYU 34. HON. JUSTICE B.I. MOLOKWU 35. HON. JUSTICE A.F. ADETOKUNBO- ADEMOLA 36. HON. JUSTICE CHUDI NWOKORIE 37. HON. JUSTICE M.I. AWOKULEHIN 38. HON. JUSTICE R.N. OFILI-AJUMOGOBIA 39. HON. JUSTICE L. ALLAGOA 40. HON. JUSTICE A.O. OGIE 41. HON. JUSTICE BABS KUEWUMI 42. HON. JUSTICE UMAR M. GARBA 43. HON. JUSTICE NYAURE BABA 44. HON. JUSTICE A.R. MOHAMMED 45. HON. JUSTICE T. ABUBAKAR viii THE NIGERIAN BANKING SYSTEM 1. The Development of Banking in Nigeria The historical development of the financial system in Nige- ria dates back to 1892 when modern banking business com- menced and a formal and institutional channel of saving mobilization was introduced into the economy with the establishment of the African Banking Corporation (“ABC”). The operation of ABC was later taken over in 1894 by the British Bank of West Africa (which later became Standard Bank) and subsequently, First Bank of Nigeria. Owing to the colonial heritage, the pioneer commercial banks in Nigeria were of foreign origin and their operations favoured finance of foreign trade and commerce. Thereafter, several other foreign and a host of indigenous banks were established. The establishment of indigenous banks was initially propelled largely by nationalistic con- sciousness rather than the existence of relevant resources, including basic skilled manpower, for running such institu- tions. Consequently, most of the early indigenous banks collapsed in rapid succession. Banks that failed during the early stage of the evolution of the Nigerian financial system were largely those with problems of inadequate capital, poor management, and fraudulent practices, among other factors. An important feature of the Nigerian financial system, es- pecially before the establishment of the Central Bank of Nigeria (“CBN”), was small scope of operations of partici- pating foreign institutions and the complete absence of any form of institutional regulatory framework which would provide the necessary guide for both the operations and orderly development of the system. These were some of the reasons behind the slow development of the financial system during the pre-CBN era. The situation however changed from 1958 when the CBN was established. Since then, series of efforts have been made by the CBN and other relevant authorities to promote the ix [2002 – 2004] 11 N.B.L.R. (PART II) Nigerian Banking Law Reports growth and development of the Nigerian financial system. For example, the need to develop the system and create an avenue for investment of short term funds informed the issue by the CBN in 1960 of Treasury Bills as a supplement to Commercial Papers that were already in the market. Other money market instruments after the establishment of the CBN but prior to the introduction of the Structural Adjust- ment Programme (“SAP”) in 1986 included Treasury Cer- tificates in 1968, Certificates of Deposit in 1975 and the Bankers’ Unit Fund as well as Stabilisation Securities in 1976. The establishment of the CBN also aided the devel- opment of the capital market. This was achieved by ensuring the emergence of the securities markets and instruments (primary and secondary) and by promoting the establishment of development banks. Following the adoption of the SAP in 1986, and the subse- quent deregulation of the financial system, the banking sys- tem witnessed radical changes. Apart from the introduction of measures and instruments to deregulate the financial services industry, the techniques and the range of products offered by the industry changed significantly. The major objective of the deregulation was to enhance economic effi- ciency and effective resource allocation through service- driven competition and improvement in quality and spread of financial services delivery.