Can A Bank Consolidate Different Accounts Of A Customer?

Daily Law Tips (Tip 564) by Onyekachi Umah, Esq., LLM. ACIArb(UK)

CAN A BANK CONSOLIDATE DIFFERENT ACCOUNTS OF A CUSTOMER?

Any bank customer in Nigeria can have as several bank accounts as he desires with any commercial bank in Nigeria. A customer can have multiple bank accounts with one commercial bank. However, can a bank combine (consolidate) accounts of its customer, to ascertain the customer’s credit and debit status with the bank? The answer to this question is not a “Yes” or “No”.

A bank has powers to combine all the accounts of a customer, kept by the customer in his own right (kept by customer in his name and for himself), in order to ascertain the indebtedness of a customer, UNLESS/EXCEPT such customer had earlier warned the bank to never do so. Such warning can be expressly or impliedly made to bank by a customer, like via email, SMS, letters, voice notes or refusal of combined accounts statements or reports from bank.

Combination of accounts cannot be done, where such accounts are maintained by a customer but not in his name and or not for himself, rather in the name of his company, business or other incorporated organizations. Such organizations are separate juristic beings (special beings created by law or registration at the Corporate Affairs Commission), they are quite different from their owners and operators. So, no bank can combine accounts of separate customers.

Below are the words of the Supreme Court and the Court of Appeal, on this issue;

“Uwaifo, JSC cited the case of British and French Bank Ltd v. Opaleye (1962) 1 SCNLR 60 to hold that: “There is no doubt in law that a banker may consolidate the accounts owned by a customer in his own right, unless precluded by agreement, express or implied from the course of business from doing so, in order to ascertain and treat as the balance, the amount standing to the credit of the customer. It is a prudent way open to the banker to assess the financial worth with it, of that customer. It is a different thing were a banker opens two accounts for a customer, one in the customer’s own name and the other in a business name or in the name of an incorporated body under his aegis or control.” It therefore means that, the right to consolidate or combine accounts of a customer will not arise where the accounts are not held in the same right, as where one is a trust account and the other a personal account. The two accounts must have been owned by the customer in his own right. Therefore, where one account is owned by the customer in his own name, and the other in a business or corporate name, even where such business or incorporated entity is controlled by the customer, the banker is not entitled to consolidate. This is so because, there is an implied agreement to keep multiple accounts of a customer distinct and separate from each other, unless there is an express agreement to the contrary. See Allied Bank v. Akubueze (supra); Fidelity Bank Plc v. Okwuowulu & Anor (2012) LPELR – 8497(CA) and Jigna Farms Ltd v. UBN Plc (2016) LPELR – 4023(CA).”
Per, HARUNA SIMON TSAMMANI ,J.C.AÂ ( Pp. 29-32, paras. E-B ). Quotation from the case of ENTERPRISES BANK LTD v. ROLA OIL LTD & ORS (2019) LPELR-49427(CA).

My authorities, are:

1. The Supreme Court’s decision in the case of BRITISH AND FRENCH BANK LTD V. OPALEYE (1962) 1 SCNLR 60
2. The Court of Appeal’s decision in the case of ENTERPRISES BANK LTD v. ROLA OIL LTD & ORS (2019) LPELR-49427(CA)
3. The Court of Appeal’s decision in the case of ZENITH BANK PLC v. OMENAKA & ANOR (2016) LPELR-40327(CA)
4. The Court of Appeal’s decision in the case ofCO-OPERATIVE DEVELOPMENT BANK v. JOE GOLDAY CO. LTD & ORS (2000) LPELR-6813(CA)
5. The Court of Appeal’s decision in the case of UBA v. UBN PLC (1994) LPELR-14388(CA)

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