Keystone Bank Limited is now officially owned by the Federal Government of Nigeria following a Lagos court ruling that dissolved its former shareholder, Sigma Golf Nigeria Limited.
The judgment, delivered on Tuesday, February 11, 2025, by the Lagos State Special Offences Court, sitting in Ikeja, was in response to a case filed by the Economic and Financial Crimes Commission (EFCC) over the fraudulent acquisition of Keystone Bank shares using government funds.
The case, which involved a former Managing Director of the Asset Management Corporation of Nigeria (AMCON), Ahmed Kuru, and Sigma Golf, centers around the alleged diversion of N20 billion from AMCON through Heritage Bank to fund the acquisition of shares in Keystone Bank.
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The development places Keystone Bank among the growing list of troubled banks in Nigeria, raising concerns about its future stability and operational efficiency, particularly as the banking sector faces intense scrutiny over governance failures, mismanagement, and liquidity crises.
During the court proceedings, the EFCC presented a six-count amended charge against Kuru and Sigma Golf Nigeria Limited, detailing how government funds meant for AMCON were funneled through Heritage Bank for illegally acquiring Keystone Bank shares. The prosecution alleged that the funds were unlawfully transferred, with the intent of taking control of the bank through fraudulent means.
Ahmed Kuru, the former AMCON boss, pleaded not guilty to the charges, while Sigma Golf’s Chairman, Umaru Modibbo, admitted guilt. In response, the EFCC’s lead counsel, Rotimi Oyedepo (SAN), informed the court that the commission had reached a plea bargain agreement with Sigma Golf.
As part of the agreement, the court ordered the forfeiture of all Sigma Golf’s rights, title, and interest in Keystone Bank to the Federal Government of Nigeria. The court also dissolved Sigma Golf Nigeria Limited and mandated the transfer of its 6.25 billion units of Keystone Bank shares, valued at N1 each, to the government.
The plea bargain agreement partly reads: “That upon the conviction of Sigma Golf Nigeria Ltd, all its rights, title, and interest in the one (1) unit of Keystone Bank Limited’s ordinary shares allotted to Alhaji Umaru Hamidu Modibbo, the current Chairman of the company, shall forthwith also be forfeited to the Federal Government of Nigeria, represented by the Economic and Financial Crimes Commission (EFCC).
“That in respect of the facts and circumstances of this case, the Complainant, the Federal Republic of Nigeria, agrees not to pursue criminal charges both now and in the future against Alhaji Umaru Hamidu Modibbo.”
The plea bargain agreement also protected Modibbo from future criminal prosecution related to the case, on the condition that he cooperates fully with any ongoing or future investigations, including providing testimony when required.
Following these developments, the court convicted Sigma Golf and ordered its dissolution, while the trial of the former AMCON boss, Ahmed Kuru, was adjourned to March 7 and April 16 & 17, 2025.
Keystone Bank Reacts, Confirms Government Takeover
Following the court ruling, Keystone Bank released an official statement confirming that it is now fully owned by the Federal Government. The bank clarified that the ruling was the outcome of a legal process initiated by the CBN and the EFCC, challenging the acquisition of the bank by its former shareholders.
Keystone Bank stated that the Central Bank of Nigeria (CBN) had earlier taken regulatory action on January 10, 2024, by dissolving the previous board and management due to “corporate governance breaches.” The bank explained that this court ruling brings much-needed clarity and stability to its ownership structure.
“This development marks a significant milestone in our journey, reinforcing our stability and paving the way for a seamless recapitalization process. With this clarity, we are well-positioned for sustained growth, stronger partnerships, and enhanced profitability,” the bank said in its statement.
However, concerns remain about the bank’s financial health and operational stability.
Keystone Bank’s Troubled History and Inclusion Among Nigeria’s Struggling Banks
Keystone Bank’s current situation mirrors the struggles of other troubled banks in Nigeria that have faced regulatory interventions due to financial mismanagement and governance issues.
The bank was previously owned by the government under AMCON before being sold to Sigma Golf and Riverbank Investment in 2017 as part of AMCON’s bank resolution strategy. However, with this recent ruling, the bank has returned to government control under controversial circumstances.
This latest development raises questions about the bank’s financial position, especially in the wake of increasing regulatory scrutiny in the Nigerian banking sector. The return of Keystone Bank to government ownership suggests deeper financial distress, as it joins the list of banks struggling with corporate governance challenges.
The Nigerian banking sector has seen a wave of regulatory interventions in recent years, with the CBN stepping in to dissolve boards and take over banks in cases of financial mismanagement. The recent sack of Heritage Bank’s board and the ongoing struggles of Union Bank and Polaris Bank indicate that Keystone Bank is not alone in facing serious operational difficulties.
However, the EFCC’s case against Sigma Golf and the subsequent government takeover of Keystone Bank underscores the growing concerns about fraud, corruption, and regulatory breaches in Nigeria’s financial sector. With the banking industry facing increased scrutiny, stakeholders are worried about the potential instability caused by frequent government interventions and the recurrence of fraudulent acquisitions.
For Keystone Bank, the key challenge now lies in its recapitalization. The government will have to decide whether to restructure the bank for long-term stability or seek new investors for another privatization attempt.
Financial analysts believe that the situation could impact public confidence in the bank, especially as government-owned banks in Nigeria have historically struggled with inefficiencies and mismanagement. If not handled properly, Keystone’s current predicament could affect depositors’ confidence, investor interest, and the overall stability of Nigeria’s financial sector.