Cracking a nut with a sledgehammer - has the Central Bank of Nigeria been too hasty in revoking banking licenses?

Author: Adetunji, Olumide

Source: Law and Financial Markets Review, Volume 3, Number 1, January 2009 , pp. 49-53(5)

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Abstract:

The Central Bank of Nigeria (CBN) is the chief statutory body charged with the responsibility of regulating and supervising banks in Nigeria. Both the Central Bank of Nigeria Act and the Banks and Other Financial Institutions Act (BOFIA) give the CBN wide powers over banks, including the power to issue and revoke banking licenses. This article takes a new but critical look at the way in which the CBN exercised its power to revoke the licenses of banks that failed to meet the new capital requirements it stipulated by 31 December 2005. This article argues that the CBN, being a public body, must exercise its statutory powers - discretionary or otherwise - in accordance with settled principles of law regarding the exercise of powers by public bodies. In particular, the paper contends that the CBN is under an obligation to revoke banking licenses only in the manner provided for under BOFIA.

Document Type: Research article

Publication date: 2009-01-01

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Law and Financial Markets Review is a new, independent, English language journal devoted to providing high quality information, comment and analysis for lawyers specialising in banking and financial market issues and to others with interests in legal and regulatory developments affecting the financial markets. Published bi-monthly LFMR contains articles written by leading experts providing a forum for practical guidance on, as well as reflective and topical analysis of, all major jurisdictions, with a particular focus on the interaction between the law and market practice and behaviour.
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