CBN Revokes 3 Banks’ Licences •AfriBank, Bank PHB, Spring Bank Affected •FG, Stakeholders React

Posted by admin CBN (Central Bank of Nigeria), Headlines Friday, August 5th, 2011

Ahead of the September 30 deadline given rescued banks to recapitalise, the Central Bank of Nigeria (CBN), on Friday announced the revocation of licenses of Afribank, Spring and BankPHB for failing

to show enough commitment to the process since the new teams were named in August 2009.

Announcing the move, Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), Ibrahim Umar, said the assets and liabilities of the three operators have been immediately taken over by bridge banks as part of efforts to ensure that the banks continue to operate under new identities.

While MainStreet Bank Limited has been licensed to take over Afribank Nigeria Plc, Keystone Bank Limited has assumed the assets and liabilities of BankPHB; and Enterprise Bank Limited, will from today run Spring Bank Plc. The three bridge banks acquired the assets and liabilities through the purchase and assumption model earlier used by the apex bank under Chukwuma Soludo as CBN governor.

The three banks were among the 10 that failed the CBN stress test conducted in June 2009, following which Wema and Unity Bank have resolved their troubles, just as new core investors- Access Bank have emerged for Intercontinental; Finbank, First City Monument Bank; Ecobank Nigeria for Oceanic Bank International; while Union Bank have emerged core investor for Union.

Equitorial Trust Bank, he noted, is close to recapitalisation.

The executive managements of the affected banks appointed by the CBN on August 14, 2009 have now been transferred to the NDIC. They are now to work with the NDIC, while the brand names cease to exist and are to be replaced by the new identities.

The bridge banks are to run the former banks until new investors are found for the three banks. This is expected to take as long as three years.

Briefing the press in Lagos on Friday, NDIC Managing Director, Ibrahim Umar, said, “the corporation is encouraged by the provision of the bridge bank option in our law, to resolve the problems in the banking sector.”

The bridge bank option, he continued, “is a veritable tool of enhancing depositor’s protections and promoting confidence by ensuring seamless continuity of banking operations.”

The bridge banks, Umar assured, will operate the banks until new investors are found to capitalise them in conjunction with the Asset Management Corporation of Nigeria (AMCON).

AMCON, he continued, is expected to open up negotiations with willing investors, adding that the action effectively resolves the crisis in the nation’s banking system, bringing certainty and stability to the system.

He also assured that no depositors have lost their money in the reform process.

A statement by the CBN also restated the CBN’s support for the action of the NDIC, which is in exercise of its statutory powers.

The CBN also assured depositors of the bridge banks of the safety of their deposits, and the seamless business continuity and “ability of the bridge banks to meet obligations to depositors and lender-creditors as they arise, by granting all waivers forbearances and exemptions necessary for their operations.”

Also, the CBN announced the extension of the inter-bank guarantees of the bridge banks until December 31, 2011 to ensure their continued operations and customer confidence.

FG Assures Depositors
The Federal Government has disclosed that no depositor would lose his or her deposit as a result of the take over of three banks,

The Minister of State for Finance, Dr Yerima Lawan Ngama, said that “no depositor will lose one kobo.”

Dr Ngama said in Abuja that government, through the Federal Ministry of Finance fully supported NDIC’s decision “to organise and incorporate bridge banks, namely: Mainstream Bank Limited, Keystone Bank Limited and Enterprise Bank Limited as a means of resolving the problems and deficiencies facing Afribank Plc; Bank PHB Plc; and Spring Bank Plc respectively.

Stakeholders React
Other stakeholders have described the take over of the three banks by the regulatory authorities as an ill wind as far as the banking sector is concerned.

The Chief Executive Officer of Prime House Investment Limited, Mr Kenneth Ugbogu, told Saturday Tribune that the development would throw panic into the banking sector and create crisis of confidence in the other rescued banks.

Ugbogu, who said the details of the takeover were not yet known stated that both the CBN and NDIC must ensure that the depositors in the affected banks must be assured of the safety of their deposits while the recapitalisation issues in the affected banks were being pursued.

Alhaji Ibrahim Musa, Managing Director of Manso Petroleum Limited, an independent oil marketer based in Abuja, panicked when told of the development in the three banks.

Alhaji Musa, who said he had deposits in one of the three banks, disclosed that the most important thing for the regulatory authorities to do was to ensure that despite the take over, the banks should still open their doors for business.

-Tribunewp_posts