Fidelity Bank Speaks on Bankruptcy Rumours Amid $3 Million Legacy Debt Dispute

• Fidelity Bank has denied media reports claiming it faces bankruptcy due to a Supreme Court ruling related to a $3 million legacy debt
• The dispute involves a longstanding legal case over a mortgaged property linked to G. Cappa Plc and Sagecom Concepts Limited
• The CBN has reassured the public, depositors and stakeholders that the Nigerian banking sector remains resilient, safe and sound

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology, Banking and the Economy.

Fidelity Bank Plc has firmly denied recent media claims that it is on the brink of bankruptcy due to a Supreme Court ruling related to an old $3 million credit facility originally granted by the now-defunct FSB International Bank in 2002.

The bank explained that this issue is part of a longstanding legal dispute inherited following its acquisition of FSB and that it is currently pursuing judicial guidance to clarify the correct calculation of the judgment amount.

In a statement signed by Meksley Nwagboh, Divisional Head of Brand & Communications, Fidelity Bank emphasised its solid financial standing, condemning the reports as false, harmful, and contrary to an existing court order.

The statement, titled “Fidelity Bank Clarifies Position on Court Judgment Inherited from Defunct FSB International Bank,” further detailed that the judgment resulted from a past transaction between the defunct FSB International Bank and Sagecom Concepts Limited.

Background to court judgment

Fidelity Bank explained that in 2002, the now-defunct FSB International Bank granted a $3 million credit facility to G. Cappa Plc, secured by a mortgage on a property in Ikoyi. When G. Cappa defaulted on repayment, it filed a lawsuit to stop FSB from selling the mortgaged property.

In 2011, the Federal High Court ruled that the bank had the right to sell the leased interest in the property to Sagecom Concepts Limited but did not grant vacant possession, leaving G. Cappa in possession and collecting rents.

Sagecom subsequently sued both the bank and G. Cappa in the Lagos State High Court for damages and possession.

In 2018, the court ruled in favour of Sagecom, a judgment later challenged at the Supreme Court. Fidelity Bank maintains that G. Cappa’s continued possession caused losses to Sagecom.

After exhausting appeals, the bank is willing to settle the debt, but highlighted ambiguities in the judgment, making the exact financial liability unclear. Based on a 2005 exchange rate, Fidelity estimates the debt at around N14 billion.

However, a recent Supreme Court ruling mandates converting foreign currency judgment debts to Naira at the trial court’s judgment date in 2018, raising the payable amount to about N30.7 billion.

The bank has now requested the court to clarify and properly compute the payable sum by G. Cappa and itself.

Fidelity Bank is not bankrupt

This Supreme Court judgment is coming at a time when the bank is making plans to begin the second stage of its recapitalisation process.

The bank also recently announced a profit before tax of N105.8 billion for the first quarter of 2025, representing a 167.8% growth compared to Q1 2024.

The bank assured its depositors, customers, investors, and the public that it is financially strong, not bankrupt, and capable of meeting its obligations, as reflected in its publicly available Q1 2025 financial results.

It stated:

"The bank is under no bankruptcy and has always been in a position to discharge its proper and lawful obligations and wishes to assure its depositors, customers, investors and the general public that the bank is in a strong financial position as shown in its Q1 2025 financial results which is available to the public."

The bank is actively pursuing all measures to identify and take legal action against those responsible for the harmful and malicious publication intended to damage its reputation and unsettle stakeholders.

CBN insists Fidelity Bank is stable

The CBN has assured the public, depositors, and stakeholders that the Nigerian banking sector is strong, safe, and stable.

The apex bank responded to misleading reports about a regulated financial institution, saying these claims are false.

A statement by the Acting Director, Corporate Communications, CBN, Mrs. Hakama Sidi Ali, emphasised that all banks follow strict rules to protect customers' funds.

It stated:

"The CBN wishes to categorically reassure the public, depositors, and stakeholders that the Nigerian banking sector remains resilient, safe, and sound."

The CBN also confirmed it closely monitors banks with effective systems to detect risks early and keep the sector secure.

Overall, the CBN reassured everyone that there is no need to worry about the safety of their money in Nigerian banks.

Fidelity Bank rejoins N1trn market cap firms

Meanwhile, Legit.ng had reported that Fidelity Bank rejoined the group of Nigerian companies with a market capitalisation exceeding N1 trillion.

The new status follows the rise of its share price by 5.3% from N19.95 to N21 on May 13, 2025, making it one of 19 firms in Nigeria to reach this milestone.

The bank's improved market value also puts it on track to meet the Central Bank of Nigeria’s new N500 billion capitalisation requirement through equity.

Source: Legit.ng