Fidelity Bank May Go Under as Supreme Court Orders It to Pay N225 Billion Damages

Fidelity Bank, one of Nigeria’s top lenders, is facing a looming insolvency crisis after a Supreme Court panel found the bank liable in a years-long tort dispute with a little-known general services venture, Sagecom Concept Ltd.

The bank has been ordered to pay N225 billion in damages, which could potentially cripple its operations.

The dispute began in the early 2000s when engineering giant G. Cappa Plc obtained a pair of loans from FSB International Bank, which was later acquired by Fidelity Bank. The loans were issued at prohibitive interest rates, and Fidelity Bank began seizing G. Cappa’s assets in Ikoyi and Ibadan when the company allegedly defaulted in 2005. G. Cappa sued, and a federal judge in Lagos ordered Fidelity Bank to desist from its aggressive depletion of G. Cappa’s assets.

The Supreme Court ruling, which was unanimous, found Fidelity Bank liable for its actions and ordered the bank to pay damages to Sagecom, which had purchased some of G. Cappa’s assets from Fidelity Bank. The court stated that Fidelity Bank’s actions were “egregious” and that the bank had deliberately disregarded a live injunctive relief from a federal court.

The ruling has significant implications for Fidelity Bank, which has consistently ranked among the biggest banks in Nigeria. The bank’s management has been holding emergency meetings to discuss the crisis, and officials have expressed concern that the bank may not be able to absorb the massive judgment without going under.

A person familiar with banking regulations said that the Central Bank of Nigeria (CBN) might ultimately intervene to prevent the collapse of a top-tier commercial lender during a fragile economic environment.

However, it is unclear what form such intervention might take.