Trocadero sues CBN over N20bn Heritage Bank recapitalisation funds

By Akin Kuponiyi

Trocadero Properties & Investments Limited has instituted a suit against the Central Bank of Nigeria (CBN) at the Federal High Court in Lagos, seeking the recovery of N20 billion it committed towards the recapitalisation of the now-defunct Heritage Bank before the lender’s operating licence was revoked in June 2024.

In the suit, filed by Senior Advocates of Nigeria (SANs) Olawale Akoni and Tola Oshobi, the investment and real estate company is seeking the refund of N15 billion paid into a CBN-designated escrow account and an additional N5 billion paid directly to Heritage Bank, both of which it said were meant solely for the bank’s recapitalisation.

According to the statement of claim, Heritage Bank, sometime in May 2023, began discussions with stakeholders, depositors and prospective investors in a bid to raise fresh capital to address its solvency challenges. As part of the exercise, the bank approached Trocadero Properties & Investments Limited, requesting it to inject fresh capital into the bank.

The company said it agreed to invest N20 billion in exchange for new shares of equivalent value once the recapitalisation process was completed.

Heritage Bank subsequently informed the CBN of the proposed investment through a letter dated May 18, 2023, titled “HB Turn Around Plan – Capital Raise”, and requested details of an escrow account into which the funds would be paid. A follow-up letter dated May 19, 2023, reaffirmed the company’s commitment to inject N20 billion into the bank.

The claimant stated that by September 5, 2023, it had paid N15 billion into the CBN’s escrow account established for the capital raise, while Heritage Bank notified the apex bank of the payment through a letter of the same date.

It added that it later paid another N5 billion directly to Heritage Bank, bringing its total investment commitment to N20 billion.

According to the suit, all parties understood that the N15 billion in escrow and the N5 billion paid to Heritage Bank were exclusively for the recapitalisation exercise, with the expectation that the company would receive newly allotted shares equivalent to its investment.

However, on June 3, 2024, the CBN revoked Heritage Bank’s banking licence, citing its statutory powers under Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020. The apex bank subsequently appointed the Nigeria Deposit Insurance Corporation (NDIC) as liquidator of the failed bank, while the NDIC commenced the liquidation process, including verification and payment of insured deposits and creditors’ claims.

The claimant contended that the recapitalisation process had neither commenced nor been completed before the licence revocation.

It argued that no shareholders’ resolution had been passed to increase Heritage Bank’s share capital and no regulatory approval had been obtained by the bank’s board to proceed with the recapitalisation exercise before liquidation commenced.

Trocadero maintained that as of June 3, 2024, the N20 billion it committed had not been utilised for the intended purpose and that it had not been allotted any shares corresponding to its investment.

It argued that the revocation of Heritage Bank’s licence rendered the recapitalisation impossible, thereby entitling it to a refund of the funds.

The company said it wrote to the CBN on June 20, 2024, demanding an immediate refund of the money but alleged that the apex bank acknowledged receipt of the letter without responding or refunding the funds.

Among the reliefs sought, the claimant is asking the court to declare the CBN’s continued withholding of the N15 billion in escrow unlawful and an abuse of administrative power.

It is also seeking a declaration that the revocation of Heritage Bank’s licence made the recapitalisation impossible and that it is entitled to an immediate refund of the N15 billion together with interest at 21 per cent per annum from July 20, 2024.

The company is further asking the court to order the CBN to refund the N15 billion with accrued interest, award interest on the entire N20 billion investment at 21 per cent per annum until judgment and thereafter until full compliance, as well as N120 million as the cost of the suit.

The CBN has, however, challenged the suit through a notice of preliminary objection filed by Senior Advocate of Nigeria, Dr. Abiodun Layonu.

The apex bank argued that the claimant lacks the legal standing to institute the action, contending that the N15 billion paid into the escrow account formed part of Heritage Bank’s assets and that only the defunct bank or its statutory liquidator, the NDIC, can maintain any action relating to its recovery.

The CBN also argued that the suit is statute-barred under Section 12(5) of BOFIA and Section 2(a) of the Public Officers Protection Act, maintaining that the statutory periods for challenging the revocation of Heritage Bank’s licence had expired.

It further contended that the statement of claim disclosed no reasonable cause of action against the apex bank, arguing that it was not a party to any agreement between Trocadero and Heritage Bank.

According to the CBN, any claim arising from the investment should be directed at Heritage Bank or its liquidator, the NDIC, rather than the regulator.

The apex bank also faulted the claimant for failing to join the NDIC as a party to the suit, arguing that the corporation, as statutory liquidator of Heritage Bank, is the proper custodian of the bank’s assets and a necessary party to the proceedings.

The matter has been adjourned until July 13, 2026, for further proceedings.