Depositors’ compensation of DMBs drops to N1.6trn in 2016

The total amount of compensation requested by Depositors of the12 Deposit Money Banks (DMBs) operating in Nigeria in 2016 dropped to N1.6trillion in 2016, against N1.8 tr reported by the 12 commercial banks in 2015.

Due to the increased in customers legal actions against commercial banks, directors of banks were forced to settle some cases in court, leading to N1.6tr in the financial year ended, December 31, 2016.

In the course of doing business in 2016, bank customers have file a suit against 12 commercial banks in an estimated N1.6 tr for various offenses that relate to alleged errors, omissions and breaches, information obtained has shown

Bank customers as well as Bankers in the country have lost billions of naira as result of engaging lawyers who lack depth in Banks and Customers’ dispute jurisprudence.

Some of these suits are being vigorously contested in courts across the country, as some commercial banks are already making excess provisions.

Investigation by our correspondent revealed that most cases against leading commercial banks sky rocked in 2016, as against prior year, as commercial banks were involved in unsolicited practices.

Further investigation revealed that bank customers do involved Economic and Financial Crime Commission (EFCC) in some of these law suits as commercial banks when negotiations go wrong.

Three leading commercial banks were involved in N1 tr customers’ litigation suits in the ordinary course of business in 2016, an increase of 0.4 per cent over that of 2015.

The three commercial banks were involved in 1235 litigation suits in the course of doing business in 2016, an increase of 8.7 per cent from 1136 litigation suits in 2015.

Again, one of these three banks is involved in 263 cases as a plaintiff in the year under review as against 180 cases in prior year.

The bank stated that total amount claimed in the 263 cases instituted is N72.9b, as against N49.6b in 2015.

The financial institution said, “However, the solicitors of the Bank are of the view that the probable liability which may arise from the cases pending against the Bank is not likely to exceed N139 million in 2016 from N109.78 million in 2015.”

However, further checks revealed that four commercial banks customers were hurting for N574.77 billion compensation in 2016 as against N780.35b in 2015.

Following claims by these banks customers’, two out of four commercial banks total provision is estimated at N3.29b in 2016.

However, these four commercial banks also instituted N214b cases against customers in 2016 from N70b in 2015, to highlight increased dispute between banks and customers.

Experts said disputes between commercial bankers and their customers, whether savers or borrowers, are inevitable like in any other commercial contractual transactions, due to risk factors, which are not the focus of this legal enlightenment.

According to experts, some of these disputes will of course be resolved at customer care desks or via emails or phone calls, while some will end up in the court of law for adjudication.