The Mischief in Fidelity Bank Bankruptcy Rumour

Fidelity Bank Plc has decisively refuted recent claims of impending bankruptcy, a rumour stemming from a Supreme Court judgment related to a $3 million credit facility extended in 2002 by the defunct FSB International Bank, which Fidelity Bank later acquired. 

On Monday, the bank issued a clarification, reassuring the public, depositors, and stakeholders of its robust financial strength despite the court ruling. In a statement by its Divisional Head, Brand & Communications, Meksley Nwagboh, Fidelity Bank urged calm and stated its active pursuit of judicial clarification on the precise computation of the judgment sum.

The bank confirmed that the legal issues originated from a legacy transaction between the defunct FSB International Bank and Sagecom Concepts Limited. FSB, a predecessor of Fidelity Bank, had granted a $3 million credit facility to G. Cappa Plc in 2002, secured by a mortgage on a property in Ikoyi, Lagos.

Upon G. Cappa's default, the construction company initiated legal proceedings against FSB at the Federal High Court in Lagos to prevent the sale of the mortgaged property for loan repayment. Fidelity Bank's statement indicated that the initial lawsuit aimed to restrain FSB from selling the alleged loan defaulter's property.

The Federal High Court ultimately ruled that the bank, as the legal mortgagor, had rightfully sold the leased interest in the property to Sagecom in 2011. However, the court declined to order vacant possession of the property, directing the matter to the Lagos State High Court. Meanwhile, G. Cappa remained in possession and continued collecting rents.

Sagecom's claim against the bank was primarily for liquidated damages. In 2018, the Lagos High Court ruled in favor of Sagecom against G. Cappa, though it still refused to order vacant possession. Fidelity Bank challenged this judgment at the Supreme Court for final adjudication.

The Supreme Court, echoing the High Court, ruled in favor of Sagecom. Fidelity Bank maintains that G. Cappa's continued possession and rent collection created the losses suffered by Sagecom. Nevertheless, after exhausting the appeal process, the bank is open to settling the obligation. In fact, inquiries by TheNiche suggest that Fidelity Bank and Sagecom are already in discussions regarding a mutually agreeable payment plan for the judgment debt.

It is this court ruling that the bank's detractors have reportedly exploited in their "demarketing voyage," leading to the bankruptcy speculation.

In response to the bankruptcy insinuation, Fidelity Bank has assured depositors and investors of its stability as a going concern, emphasizing that it faces no solvency or liquidity issues. The bank asserted that, irrespective of the Supreme Court judgment, it is not under any threat of bankruptcy or liquidation.

This fact is corroborated by Fidelity Bank's consistent strong financial performance, evidenced by significant growth in key metrics such as profit before tax (PBT), gross earnings, and net interest income. The bank is also well-capitalized, maintaining a robust Capital Adequacy Ratio (CAR) well above regulatory minimums, indicative of a solid financial foundation.

Furthermore, Fidelity Bank is actively expanding its presence both domestically and internationally, with a strategic focus on digital banking and customer-centric services. The bank has also received multiple awards for its performance in corporate banking, SME support, and digital banking, underscoring its leadership in the financial sector. Consequently, it has garnered highly positive investor sentiment and strong support, with oversubscriptions in equity capital raises and substantial share price growth.

The Central Bank of Nigeria (CBN) has also weighed in, dismissing the bankruptcy story as misleading. In a statement issued Monday night by Mrs. Hakama Sidi Ali, Acting Director, Corporate Communications, the apex bank affirmed its continuous monitoring of all financial institutions under its regulatory purview. The CBN highlighted its robust frameworks for early warning signals and risk-based supervision, which ensure prompt addressing of emerging issues to protect the financial system's integrity.

The CBN urged the public to "disregard sensational or unverified claims and rely solely on official channels for information about the financial system," assuring that "the Nigerian banking sector remains resilient, safe, and sound."

Some financial experts speaking to TheNiche posit that the bankruptcy narrative was fabricated by individuals unable to compete, "unnerved by the unprecedented growth of Fidelity Bank particularly under the leadership of Nneka Onyeali-Ikpe."

"How can a bank, which is unarguably one of Nigeria’s leading Tier-1 financial institutions, a bank that has just announced a remarkable financial performance for the first quarter of 2025, recording a PBT of N105.8 billion, which represents an impressive growth of 167.8 per cent compared to N39.5 billion in Q1 2024, suddenly go bust?" questioned Mr. Olamilekan Johnson, a financial expert. "It is all an attempt by unscrupulous people to demarket the bank. This is not the first and I am afraid, it won’t be the last. But I hope that in the interest of the country’s financial sector, they stop."

Johnson's observation is pertinent. In the wake of Heritage Bank Plc's banking license revocation by the CBN on June 3, 2024, a similar malicious campaign was launched, attempting to trigger a run on Fidelity Bank, Wema Bank, Polaris Bank, and Unity Bank. This occurred just one week after Fidelity Bank signed documentation to raise approximately N127.1 billion from a public offer and rights issue to existing shareholders, aimed at bolstering its capital base in compliance with the CBN’s fresh capitalization directive.

This latest bankruptcy hoax could well be a panic reaction from the same naysayers who cannot positively reconcile themselves with the robust fundamentals exemplified in the bank's incredible performance.

As Joseph Campbell famously said, "The cave you fear to enter holds the treasure you seek." We confidently place our treasures and bets on Fidelity Bank as the Nigerian treasure house to beat in the years ahead!