NDIC sues Wema Bank over N125bn Banana Island property linked to defunct lender

The Nigeria Deposit Insurance Corporation (NDIC) has filed two lawsuits against Wema Bank in the Federal High Court in Lagos concerning the recovery of assets linked to the defunct Gulf Bank Plc. These actions aim to reclaim properties in Banana Island valued at approximately N62 billion and seek the recovery of N401 million in disputed payments, nearly 20 years after Gulf Bank’s collapse in 2006, when the Central Bank of Nigeria revoked its license due to insolvency.

In the first lawsuit, NDIC claims six Banana Island properties, originally purchased through a shell company called Euston Wenberg Engineering Company Limited, are still beneficially owned by Gulf Bank, despite being recorded as a loan account in the bank’s internal records. NDIC asserts that Wema Bank took custody of these assets to secure an interbank deposit of N771.79 million, which a joint CBN/NDIC examination found unsubstantiated. NDIC challenges a transaction where Wema Bank presented cheques totaling N250 million as a purchase, arguing that this amount is far below the true market value of the properties.

The second lawsuit involves another set of six properties acquired through Bacad Finance and Investment Limited, in which Gulf Bank held over 80% of shares. NDIC accuses Wema Bank of claiming to have sold these assets for N524 million, a price NDIC argues is vastly undervalued compared to the properties’ estimated worth of over N4 billion each. Additionally, NDIC contends that despite previously approving a lesser amount of N1.6 million as the bank’s sole outstanding deposit, Wema Bank wrongfully collected N401 million from NDIC’s agent bank, UBA, without valid justification.

In its objections, Wema Bank argues that the NDIC claims do not stem from any banking transactions between them and asserts that it had no customer relationship with Gulf Bank. The bank also contends that the suits reveal no debtor-creditor relationship and questions NDIC’s legal standing since the properties in question were owned by a separate legal entity, Bacad Finance. NDIC seeks court declarations to void any purported sales and to compel Wema Bank to return land title documents or compensate for the current value of the disputed properties.