Gtbank Reveals Why It’s Taking 60 Bank Chiefs To Court Over N17bn

GTBank has initiated legal proceedings against 60 bank executives from 13 commercial banks over a N17bn debt. The court case stems from alleged non-compliance with a No-Debit-Order placed on AFEX Commodity Exchange’s accounts.

Guaranty Trust Bank (GTBank) has initiated legal action against 60 top executives of 13 commercial banks over a lingering N17bn debt linked to the Anchor Borrowers Programme loan. The executives, including chairmen, CEOs, directors, and company secretaries, face contempt proceedings for allegedly failing to enforce a No-Debit-Order on the accounts of AFEX Commodity Exchange held with their banks.

The Federal High Court in Lagos, presided by Justice CJ Aneke, issued an order for these executives to be committed to jail for not complying with a ruling from May 27, 2024. This court ruling directed 20 banks to transfer funds standing to the credit of AFEX Commodity Exchange into its account with GTBank until the N17.81bn debt is repaid.

In a legal notice titled ‘Order to serve notice of disobedience to order of court vide newspaper publication,’ the court mandated the service of Form 48 (Notice of Consequences of Disobedience to Order of Court) and other related documents to the 60 cited parties.

The next hearing is scheduled for Thursday, with parties cited for contempt including Access Bank, Citibank, Jaiz Bank, Union Bank, Fidelity Bank, First Bank of Nigeria Plc, First City Monument Bank, NDIC (liquidator for Heritage Bank), Polaris Bank, Stanbic IBTC Bank, Standard Chartered Bank, Taj Bank, United Bank for Africa, and Zenith Bank.

The court had previously allowed GTBank to take over AFEX’s 16 warehouses across seven states and sell the commodities stored in them, which were procured using the Central Bank of Nigeria (CBN) Anchor Borrowers’ loan facility. AFEX reportedly obtained the loan to finance smallholder farmers but failed to repay it, leading to the current legal dispute.

AFEX claims to have repaid about 90% of the loan but cites economic challenges, including the impact of the Naira redesign policy, as reasons for the remaining unpaid portion. AFEX has called on the CBN to activate the collateral guarantee clause included in the Anchor Borrowers programme to mitigate the situation.

The Anchor Borrowers Programme, launched in 2015 by the CBN, aimed to create economic linkages between smallholder farmers and processors to boost agricultural output and stabilize food prices. By 2022, the program had benefitted at least 4.8 million people, with over N1.079tn disbursed under the initiative.

The CBN has since discontinued the Anchor Borrowers Programme, shifting its focus back to its core responsibilities of maintaining price and monetary stability.