Mergers and Acquisitions in the Banking Sector: An Examination of Separation of Powers Amongst Regulators

Description

ABSTRACT

Mergers and Acquisitions in the Banking Sector: An Examination of Separation of Powers Amongst Regulators

Lisa Onianwa*, Oluwatosin Omobitan** , and Amanda Opara***

This paper examines the mergers and acquisitions terrain in the banking sector generally as well as the overreaching powers of the CBN in excluding a sector neutral regulator in its affairs. The paper also questions the process/procedure that banks, specialised banks, and other financial institutions will go through in implementing M&A deals and also makes recommendations as to how the process can be streamlined.

Keywords: Mergers, Acquisitions, Specialised banks, Central Bank, Financial institutions, Banking.

INTRODUCTION
With the enactment of the Federal Competition and Consumer Protection Act, 2018 (the FCCPA) and the regulations promulgated pursuant to it, Nigeria has joined other jurisdictions such as England in creating a discrete regulator for anti-competitive conduct. Prior to this, only sector specific regulatory supervision was available for such conduct. Stakeholders are still grappling with the different regulations, particularly those involving mergers. The enactment of the Banks and Other Financial Institutions Act, 2020 (BOFIA) has introduced further changes which affect the scope of the FCCPA as it pertains to the Central Bank of Nigeria (CBN), banks, specialised banks and other financial institutions (CBN licensees).

THE FEDERAL COMPETITION AND CONSUMER PROTECTION COMMISSION (THE FCCPC)
The advent of the FCCPA in January 2019 ushered in the FCCPC, which is saddled with the responsibility to administer the provisions of the FCCPA.

By virtue of the FCCPA, the FCCPC is vested with broad powers and functions over mergers (inclusive of amalgamations and acquisitions).₁ On the day that the FCCPA was passed, mergers and acquisitions (M&A) by CBN licensees were put under the regulatory purview of the FCCPC, and the FCCPC had the power to approve, investigate, revoke, hear petitions in merger proceedings.₂

CBN AS A COMPETITION REGULATOR
The BOFIA which was passed into law on 12 November 2020, replaced the Banks and other Financial Institutions Act, 1991 (Old BOFIA), and is today the apex law regulating the activities of CBN licensees.

* Senior Associate, G. Elias & Co.
** Associate, G. Elias & Co.
*** Associate, G. Elias & Co.

1. FCCPA, s 2.
2. FCCPA, ss 92-103.

THE GRAVITAS REVIEW OF BUSINESS & PROPERTY LAW VOL.12 NO.2