GTBank drags Access Bank to court over Anchor Borrowers Loan

Guaranty Trust Bank (GTBank) has taken legal action against 60 top executives from 13 commercial banks due to a lingering dispute with Afex Commodity Exchange over a N17 billion loan from the Anchor Borrowers Programme.

These executives, including chairpersons, CEOs, directors, and company secretaries of the 13 banks, face contempt proceedings for allegedly not enforcing a No-Debit-Order on Afex Commodity Exchange’s accounts held with their banks.

In the case, numbered FHC/L/CS/911/2024 and presided over by Justice CJ Aneke at the Federal High Court in Lagos, an order was signed for the arrest of the bank officials and the liquidator of Heritage Bank (represented by the Nigeria Deposit Insurance Corporation) for not complying with a court ruling from May 27, 2024.

A legal notice published in several national newspapers, including The PUNCH, announced an order permitting the plaintiff to serve Form 48 (Notice of Consequences of Disobedience to Order of Court) and other related forms on the 60 individuals cited for contempt.

The next hearing is scheduled for the coming Thursday.

Banks involved in the contempt proceedings include Access Bank, Citibank, Jaiz Bank, Union Bank, Fidelity Bank, First Bank of Nigeria Plc, First City Monument Bank, NDIC (as the liquidator for Heritage Bank), Polaris Bank, Stanbic IBTC Bank, Standard Chartered Bank, Taj Bank, United Bank for Africa, and Zenith Bank.

The court’s May 27, 2024 ruling directed 20 banks to transfer funds from the respondent’s accounts to GTBank until the N17.81 billion loan is fully repaid. This amount includes N15.77 billion outstanding as of April 17, 2024, and N2.04 billion in recovery costs and incidental expenses.

The court also permitted GTBank to take over and sell commodities stored in AFEX’s 16 warehouses across seven states, procured with the Central Bank of Nigeria’s Anchor Borrowers’ loan facility.

Earlier, the court had issued contempt proceedings against AFEX and its key officers, including Ayodele Balogun, Jendayi Fraaser, Justin Topilow, Mobolaji Adeoye, and Koonal Ghandi.

According to court documents, AFEX obtained the loan from GTBank to finance smallholder farmers under the CBN Anchor Borrowers’ programme, with repayment expected from the sale of commodities. However, AFEX failed to fulfill its repayment obligations even after an extension.

AFEX, in a statement, claimed it had repaid about 90% of the loan, though some amounts remain unpaid due to the farmers’ defaults. The exchange attributed the shortfall to economic challenges, including the impact of the Naira redesign policy.

Despite consistent repayments in prior years, the cash crunch led to significantly lower repayment rates from farmers for the 2022/2023 season. This shortfall impacted AFEX’s ability to repay the loan by the end of Q1 2023, even after a six-month extension.

AFEX has called on the Central Bank of Nigeria to activate the collateral guarantee clause, which covers up to 70% of the loan, to support recovery efforts and stabilize agricultural activities.