Banking: Theory, regulation, law and practice
Editor: Dr. Oladapo Olanipekun (SAN)
Publishers: Au Courant
Reviewer: Uche Nwokedi (SAN)
The Book is a compilation of essays written by some very experienced and erudite members of the Bar. It is written in chapters with each chapter being a contribution from a lawyer or a couple of lawyers. All the referencing is by footnotes, using the Oxford Standard for Citation of Legal Authorities (OSCOLA) (4th edition, 2012). So far as it has been possible, most of the writing has been kept gender-neutral. Given that the anticipated use of the book is not restricted to lawyers, the authors also strived to keep the text in plain English, devoid of legalese and outdated words. In all, there are 25 contributors with 22 chapters of 823 pages, including the index, all of which have been carefully and meticulously edited by the learned Senior Advocate, Dr. Oladapo Olanipekun. Interestingly, the book is published in Nigeria by Au Courant. It is published with good quality materials and neatly bound in hard covers.
The publication is well laid, easy to read and easy to reference or cross reference. The topics are thoughtfully chosen and treated. It contains, table of contents, a preface written by Dr. Oladapo Olanipekun, a foreword written by the Honourable Justice John Inyang Okoro JSC, editor’s acknowledgement, list of contributors and finally, profiles of the contributors.
Chapter One dwells on Banking Regulation and Supervision: Concept, Theory and Rationale written by Oladapo Olanipekun. This Chapter addresses the theory and rationale for financial regulation from a global perspective in general and then focuses on Nigeria in particular. It defines in clear terms, the distinction between Regulation and Supervision and justifies each aspect, whilst recognizing that financial regulation is contentious. It states that the rationale for financial regulation is that banks are special. This chapter also identifies certain reasons why banks are special. It then turns its attention to “money”, and addresses the nature, functions and attributes of money in a way that everyone can understand.
Chapter Two is on “The Historical Development of Banking Law and Regulation in Nigeria”by Jumoke Oduwole. This chapter gives us some historical perspective to banking in Nigeria. In fact the author interestingly prefaces the chapter with a quote from Napoleon which immediately presents an idea of how old banking issues are. Here, the author carefully traces the evolution of banking in Nigeria in broad periods from 1892 to 1952 as the first stage of banking evolution in Nigeria, 1952 to 1985 as the second stage and then 1985 to 2010 as the third stage of the development of banking law and regulation in Nigeria.
Chapter Three is on “Corporate governance in Banking” by Bankole Sodipo & Veronica Ekundayo.
The authors of this chapter focus on the delicate question of corporate governance in banking. Corporate governance is a constant debate even in the developed countries like the US and Britain. They do this so articulately by dividing the topic into five parts.
Chapter Four is on “Cross Border Issues and Regional Integration in Financial Regulation” by Iwa Salami. In this chapter the author carefully analyses the legal and regulatory challenges inherent in the delivery of cross border services by African Banks within Africa and proposes solutions for making the operation of such services safer. The chapter is divided into four different sections.
Chapter Five: “Regulatory and Supervisory Framework for Banking in Nigeria” by Akaayar & Christine Sijuwade. This chapter deals with the legal definition of bank and banking business, and parties involved in banking business. It deals with the structure and classification of Nigerian banking system and the institutions that make up the Nigerian banking system such as the government, the CBN, the commercial banks, merchant banks and micro finance banks. It discusses in a unique way, the history of banking regulations and supervision in Nigeria and an overview of current statutory framework for banking.
Chapter Six dwells on “Legal Aspects of the Banker – Customer Relationship”by Oladapo Olanipekun. This chapter deals with a legal description and identification of who is a banker and who is a customer. It explains the different types of bank customers which include individuals, companies, partners/partnerships and Trustees. It discusses in details the various legal fallouts of the relationships of banker/customer in terms of the obligations of the parties and the dispute resolution mechanisms for banker customer relationships.The author also attempts to give the statutory and judicial definition of the word “bank”.
Chapter Seven is on Negotiable Instruments by Lanre Fagbohun & Adewale Dosunmu. This chapter focuses on the legal nature of negotiable instruments with emphasis on its features. It exhaustively deals with the various types of negotiable instruments, the varied ways in which negotiable instruments can be employed and regulatory mechanisms that have been put in place to control its uses especially the litigious issues of the rights and duties of banks in relation to its customers and third parties.
Chapter Eight is on Securities for Bankers’ Advances by Imran Oluwole Smith. This chapter deals mainly with proprietary and possessory security as well as the equitable charge from the angle of the available subject matter. For proprietary security, the chapter examines mortgages over land and personal chattels. In the case of possessory security, pledge of personal chattel and possessory lien in chattels are considered. Also equitable charge or hypothecation is considered in this chapter. According to the Author, this is often referred to as real security.
Chapter Nine borders on Secured Credit: Choses in Action as Security by Dr. Nnamdi Dimgba. This chapter examines the general principles of choses in action, its definition and the applicable rules for consensual security over the intangibles. Against this backdrop, the chapter is divided into two broad sections. The first section sets out a number of key definitions and highlights the applicable principles in taking security over choses in action generally.
Chapter Ten is on Maritime Security by Dr. Joseph Nwobike (SAN).Under this chapter, the author first gave a general over view of securities, classifications and types of securities and characteristics and reasons for securities. The chapter explains maritime security. It discusses the types of security interests that can be created over maritime property which are, mortgages and liens.
Chapter Eleven is titled Documentary Credits by Adewale A. Olawoyin. This chapter treats in broad terms, the nature of documentary credits. It gives an overview of the evolution of the core principles regarding the contractual nexus in documentary credits as recognized and applied by Nigerian courts. The writer defines documentary credit as a sophisticated form of financial intermediation between exporters and importers of goods. It also discusses the different types of letters of credit which are confirmed/irrevocable letters of credit, unconfirmed letters of credit, revolving letters of credit and standby letters of credit.
Chapter Twelve: “Guarantees and Indemnities” by Kolawole Mayomi.This chapter focuses on the distinctions and similarities between Guarantees and indemnitiesas undertakings. In so doing the chapter is divided into four separate sections Chapter Thirteen is on Debt Recovery – Summary Judgment, Undefended List and Garnishee Proceedings by Yemi Oke. This chapter attempts a critical examination of the concept of “debt” as well as legal and procedural steps involved in debt recovery. It gives an overview of debt recovery practice obtainable in Nigeria.
Chapter Fourteen is on Debt Recovery: Corporate Insolvency – Receivership, Winding up and other Arrangements by C.A. Candide – Johnson & Aderonke Alex – Adedipe.This chapter takes up another aspect of debt recovery not covered by the preceding chapter. This chapter discusses in details the concept of corporate insolvency, its effects on debtor companies and remedies available to creditors and the insolvent company. The chapter also considers extensively, the concept of receivership and the role receivers play in debt recovery in the event of corporate insolvency.
Chapter Fifteen “Troubled Assets Resolution”by Ikani Agabi & Adetola Onayemi.This chapter exhaustively discusses the AMCON Act 2010. It examines the concept and practice of troubled assets resolution, using the regime established under the AMCON Act, 2010 as an illustration and study guide. In doing this, the chapter considers the 2007 – 2009 global financial crises and its impact on banking regulations, Nigeria’s response to it and the responses of some of the western countries to the crises particularly the U.S’ response referred to as the Troubled Assets Relief Program (TARP).
Chapter sixteen is on Failure Resolution by Khrushchev Ekwueme. This chapter explains the rationale underpinning the existence of a special insolvency regime for banks in contradistinction to other companies, and identifies the causes and effects of the 2008/2009 financial crises in Nigeria. It also discusses the legal basis for the CBN governor’s replacement of managing directors and executive directors of banks found to be in grave situation under section 33(1) of the CBN Act of 2007 by the CBN/NDIC joint examiners of banks in 2009 and the injection of liquidity support into the intervened banks of the CBN while Chapter Seventeen dwells on Deposit Protection by Oladapo Olanipekun. This chapter examines the theory and concept of deposit insurance, the historical, normative and structural evolution of deposit protection, the rationale and objectives of deposit insurance schemes in order to establish the desirability of its inclusion in the financial safety net. The chapter also considers the moral hazard problems as intrinsic to deposit insurance. Further, structural and policy considerations for the introduction or reform of deposit insurance schemes are discussed. The chapter concludes with a disquisition of the deposit insurance regime in Nigeria.
Chapter Eighteen “Mergers, Takeovers and Reorganization of Banks in Nigeria” by Fabian Ajogwu. In this chapter, the introductory aspect traced the evolution of banks and banking in Nigeria. This chapter examines the reforms in the banking sector which led to the present status of banking in Nigeria. The sector considers broadly, the principles of mergers, takeovers and restructuring of banks in Nigeria.
Chapter Nineteen “Non – Interest Banking”by Yusuf O. Ali. This chapter seeks to explore issues around non interest banking with a view to providing an easy guide to non – interest banking, particularly the law, theory, concepts, regulations in Nigeria in comparative with regulations in other countries. The chapter attempts a definition of non interest banking, the theory behind Islamic banking, the operation of non-interest banking in Nigeria.
The issue of Electronic Banking is captured in Chapter Twenty. It was written by O.A. Orifowomo. This chapter discusses in details the meaning and forms of electronic banking including the use of ATMs, POS, and Electronic Funds Transfer. It also discusses the regulatory framework for electronic banking in Nigeria, which is mainly the CBN Act and Guidelines, it explores incidents of the banker–customer relationship in electronic banking, customer protection in electronic banking environment and the conflict of law rules in electronic banking.
Chapter Twenty – One is titled Mobile Banking by Olawale Fayose.This chapter considers jurisdictional experience with Nigeria as a focal point in the regulation of mobile banking (m-banking) and mobile payment (m-payment). In so doing, the chapter considers the financial inclusion policy initiative and role of mobile technology as a means to financial inclusion while Chapter Twenty- Two dwells on Financial Crimes and was written by khadija Yusuf. This chapter gives a broad view of what constitutes financial crimes and the regulatory landscape for financial crimes, evidence and proof of financial crimes.