FRC report on Stanbic IBTC reckless -CBN

The Central Bank of Nigeria, CBN, yesterday faulted the Financial Reporting Council’s indictment of Stanbic IBTC Holdings Plc, describing it as baseless and lacking in merit.
Governor of CBN, Godwin Emefiele, registered the apex bank’s displeasure with the Council via a letter addressed to its Executive Secretary/Chief Executive, Jim Obazee, adding that the council was reckless and hasty in sanctioning the bank and its directors for alleged misstatement of the company’s 2013 and 2014 accounts.
The CBN governor also exonerated Stanbic’s management and board of virtually all the allegations and berated the Council for not following due process as stipulated in the FRC Act No.6 of 2011 in punishing the bank.
“In the light of the foregoing facts, which clearly show that FRCN did not follow due process, the CBN regrets to inform that it is unable to accede to FRC’s request to take disciplinary action against SIBTCH. Indeed, the CBN does not see any reason to advise or compel SIBTCH to obey the sanctions meted to it by the FRCN,” the apex bank said.
According to the CBN, the final notice and regulatory decision by the Council were based on the FRC Act No.6 of 2011 and Regulation 21 of the FRC Guidelines/Regulation for Inspection and Monitoring Entities 2014, adding that contrary to the allegation of the FRC that Stanbic IBTC did not obtain approval from the National Office for Technology Acquisition and Promotion (NOTAP) for payment of affiliate software licence, its review showed that the bank actually obtained the necessary approval from NOTAP to pay affiliate software license from the Standard Bank South Africa, for the period of three years covering June 1, 2012 to May 30th 2015.

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“With regard to the allegation of non-disclosure of intangible assets in SIBTC’s 2013 and 2014 financials, we note that the bank adequately recognised the software as an intangible asset in its 2011 financials and sufficiently disclosed the disposal of the software in the 2012 financials. Consequently, the said software could not have been reported as an intangible asset in the succeeding years 2013 and 2014,” the CBN said.
Further, the CBN said the allegations of lumping several expense items under ‘Others’, the items were not material enough to appear as line items in the income statement, insisting that the non-disclosure of the items did not materially affect the true and fair view of the financial statements.
The apex bank however concurred with the FRC that SIBTC erred in the classification of some line items.
“However, the identified misclassifications did not understate or overstate its assets and liabilities did not understate or overstate its assets and liabilities, neither did it increase nor decrease its income or expenditure, such as would have caused a material misrepresentation of the financials,” the CBN said.
The CBN also contended that if Stanbic used its judgment to capture donation of N275 million under ‘Others’ it was because it was the opinion of the bank that it was not a charitable donation but a mandatory contribution towards the victims of terrorism in the country.

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