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GTBank initiates legal action against 60 Executives from 13 banks in N17 bln loan dispute

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Guaranty Trust Bank (GTBank) has initiated legal proceedings against 60 top executives from 13 commercial banks over an ongoing N17 billion loan dispute related to the Anchor Borrowers Programme.

The executives, including chairmen, CEOs, directors, and company secretaries, are facing contempt charges for allegedly failing to implement a No-Debit-Order placed on the accounts of Afex Commodity Exchange.

The lawsuit, registered as suit no FHC/L/CS/911/2024, involves GTBank and AFEX Commodities Exchange Limited. Presiding Judge, CJ Aneke of the Federal High Court in Lagos, ordered the bank officials and the liquidator of Heritage Bank (Nigeria Deposit Insurance Corporation) to be jailed for not complying with a court ruling issued on May 27, 2024.

A public notice in some national dailies stated that the court granted GTBank permission to serve contempt notices to the 60 executives. The next hearing is scheduled for Thursday.

The banks involved include Access Bank, Citibank, Jaiz Bank, Union Bank, Fidelity Bank, First Bank of Nigeria, 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.

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The May 27 court ruling directed 20 banks to transfer funds from AFEX’s accounts to GTBank until the N17.81 billion loan is repaid. The sum includes N15.77 billion in outstanding debt and N2.04 billion in recovery costs.

The court also allowed GTBank to take over 16 AFEX warehouses across seven states to sell the commodities stored within them, which were procured using the Central Bank of Nigeria’s Anchor Borrowers’ loan facility.

AFEX, in its defense, claimed to have repaid about 90% of the loan, citing economic challenges faced by smallholder farmers as the reason for the delay in full repayment. AFEX stated that significant macroeconomic and policy issues, including the naira redesign policy, had adversely affected farmers’ ability to repay loans.

The commodities exchange has called on the Central Bank of Nigeria to activate a collateral guarantee clause in the Anchor Borrowers Programme to address the remaining debt.

The Anchor Borrowers Programme, initiated by the CBN in 2015, aimed to connect smallholder farmers with processors to boost agricultural output and stabilize food prices.

By 2022, it had benefited 4.8 million people, with over N1 trillion disbursed under the program. However, the CBN has since discontinued the program to focus on its core duties of price and monetary stability.

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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