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Segun Agbaje’s GTCO (GTBank) under Scrutiny over Huge Net Income Interest Profit Declaration, despite Pending Court Cases on Overcharging
Mark Twain, American humorist, journalist, lecturer, novelist and moralist was ascribed to have said “A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.” This simply means one can’t expect bankers to be of help when they are really needed, this much can be used to describe how the Segun Agbaje led Guaranty Trust Holding Company Plc/ GTBank, has been working against its clients for personal profit.
There has recently been so much noise about the ₦1 Trillion plus profit declared by the financial institution. According to the report made available the Segun Agbaje led group was said to have made a large chunk of the announced growth of its income from the Net Interest Income (NII), which recorded a 176.9 per cent growth to ₦491.5 billion from ₦177.5 billion last year.
For a clearer understanding the Net Interest Income (NII), is the difference between the profit earned as interest on loans given to borrowers against the money it pays out as interest on deposits or loans to depositors and its lenders.
The most common effects of net interest income on borrowers according to findings includes; Higher Interest Rates (this is the period whereby financial institutions arbitrarily raise interest rates to enable them make money). Overcharging (this is such that the financial institution manipulate things so additional fees are imposed or charges on borrowers), Stifling Innovation and Growth and many more.
With Segun Agbaje’s GTCO announcing ₦314 billion increase on the previous year coupled with the current economic crisis facing the country, there is strong indication that the many accusations against the group as inherited from the GTBank on overcharging by several companies may be founded.
If it would be recollected, the bank before and after it metamorphous into the Holdings Company it currently is, is not new to sanctions that has to be with disregard for laid down rules, in 2018, the UK Financial Conduct Authority (FCA) stopped GTBank UK from taking on new customers, note GTBank UK is an independent subsidiary of the GTCO.
The bank was later fined £7,671,800 for serious weaknesses in its anti-money laundering (AML) systems and controls between October 2014 and July 2019, the huge fine became necessary when lesser fine of £525,000 in August 2013 for serious and systemic failings fails to deter the bank.
In a similar action of disregard to rules for profit maximization the GTBank Ghana’s Foreign Exchange Trading License was suspended earlier this year over breaches of foreign exchange market regulations which include incidents of fraudulent documentation within their foreign exchange operations for a month in accordance with the relevant law in Ghana.
The Segun Agbaje led organization’s knack for bending the rules for profit was a major reason most people are calling on CBN and other relevant agencies to investigate the announced profit especially with regards to NII as the litigation against the bank on issues that has to do with overcharging is still pending before various courts in Nigeria.
If it would be recollected, overcharging is the main bone of contention of the now more than ₦20 billion case between GTBank and Innoson Motors. Innoson had dragged the bank to court for over-charging on a loan facility it got from the Segun Agbaje led bank.
Information was that Innoson has decided to conduct a proper auditing when they started getting strange charges in their account, it was the process that revealed GTBank has over-charged it to the tune of ₦786million over the course of several years dating back to 2004, after which Innoson informed the bank.
It was when the bank denied it and insisted that Innoson is still owing them that the company was forced to seek court help where a subsequently judgement was given in May 2013, and the Segun Agbaje led bank was asked to pay the sum of ₦559,374,072.09, “with a 22 percent interest on the admitted sum to be paid from March 1, 2004 since that was the interest rate on the loan, till satisfaction of the judgment debt.
The court also added a 100% penalty as stipulated in the CBN Guidelines for excess charges by banks, which brought the total judgment cost then to ₦2.4 billion, but is likely to be more that ₦2o Billion at the moment because the bank has been finding way to stop the execution of the judgement.
Another case pending in court against the Segun Agbaje led GTCO, was made public knowledge last year when GTBank through a receivers’ manager tries to illegally (by pronouncement of a court) take over properties of Stallion Group Nigeria over a purported ₦13 billion debt, whereas the CFO of Stallion Nigeria contends that it is not owing GTB any longer and that on the contrary, it is on record that it has paid more than what was outstanding to GTB by ₦6,423,700,000.
Stallion Nigeria in its application, which was granted by the Court had explained that the preliminary KPMG forensic audit report had established that GTB overcharged Stallion, in excess, fraudulent and illegal charges of ₦4,693,625,637.49, adding that GTBank had accepted this finding by the auditors.
Stallion has been in court with GTBank since 2019 over allegations and claims with Stallion winning against GTBank at the Court of Appeal, Nigeria. The Court of Appeal presided over by the Honourable Justices Daniel-Kalio, Sirajo and Banjoko, had previously delivered Judgment in favour of Stallion Nigeria against Guaranty Trust Bank Plc on 24 February, 2022 and set aside the Ruling of Honourable Justice Saidu in favour of GTBank.
The problems that come with the Overcharging and Higher Interest Rate are some of the profit driven actions the Segun Agbaje led group, has been heaping on many of their customers that makes doing profitable business difficult. While some are locked in prolong legal battle with the bank and the group as a whole, some had been forced to throw in the towel.
One of the companies that was not so lucky because of the nature of business is Toyin Subair led HiTV, in an interview the lawyer turned businessman
granted a news media in 2019, he lamented how 25% – 27% interest rate becomes a burden that killed the company in his word “At 25-27% interest on debt, most businesses cannot survive and you will be a slave to the banks for life. That is why they take collateral from you. They lend against your collateral not your business case. Regardless of our strong cashflows, the funding requirements continued to increase.” He explained
Stating further while advising prospects, “HiTV was paying an average of 1.1billion Naira approximately in interests and guarantee charges annually, for over 5 years! For a new company, we did a damn good job but really got blown out. I never live by debt and so was really ignorant about how interest works up till HiTV and of course since then you won’t catch me near it. But what do you do when you have to? They say internationally that “equity is more expensive than debt”, but that is NOT true in Nigeria. Debt is way too expensive and destructive.” He continued.
He relays how GTBank, a financial institution that pride itself as a business friendly organisation used high interest rate to kill a wonderful business and thereby rendering many young Nigerians jobless.
Knowing the antecedent of the Segun Agbaje led financial group well-meaning Nigerians has been calling on relevant regulatory agencies to look into the declared Net Interest Income and put in place measures to make sure the effort of the government to revamp the economy will not be frustrated by the company’s insatiable appetite for profit.
