Reps to probe CBN over nationalized banks

Posted by admin CBN (Central Bank of Nigeria), House, Legislature Sunday, October 2nd, 2011

The last may not have been heard about the nationalization of three banks by the Central Bank of Nigeria [CBN] as the House of Representatives Committee on capital market gave indication of its readiness to revisit the exercise.

Chairman of the recently inaugurated Committee on Capital Market, Hon Herman Hembe, who gave the hint at the weekend in an interview, added that the committee would probe into the continuous decline of companies’ shares in the nation’s capital market.

He stated that complaints from stakeholders showed that all was not well with the nationalization, hence, the resolve of the committee to investigate the process that led to the nationalized banks by the CBN and the Nigeria Deposit Insurance Corporation (NDIC). He stated that upon his inauguration as the chairman of the committee, he had received several petitions from stakeholders in the sector, alleging that due process was not followed in the nationalization of the affected banks.
Three banks taken over by the government include; Afribank Nigeria Plc; Spring Bank Nigeria Plc and Bank PHB Plc. The banks are to be reflated and managed by Asset Management Corporation of Nigeria (AMCON).
Hembe also disclosed that the committee would look into the new wave of recapitalization in the banking sector whether they were in conformity with Sections 88 and 89 of the 1999 constitution (as amended).
According to him, the continuous decline of shares in the capital market was also of interest to the committee.

He said the capital market had declined to an unenviable level due to some of the interventions in the system.
For instance, he pointed to the All Share Index which rose to 57,990.22 points as at December 31, 2007 and market capitalization of N13.29 trillion with over 300 listed securities on the Nigeria Stock Exchange, which, he said, had witnessed a crash to 20,202.50 points and a market capitalization value of N6.44trillion. This, he pointed out, represents a 56 per cent decline in about four years.

“Let me particularly point to the ongoing mergers and acquisition of banks, which operations fall directly within the purview of this committee. The process has largely been flawed. “Laws, rules and procedures have not been followed. We will step in to ensure the rule of law. Following my appointment, I have received quite a number of petitions regarding these mergers particularly with respect to the fact that some very high bids were disregarded in favour of lower bids. It is my resolve and that of this committee to intervene in the best interest of the Nigerian investors,” Hembe said.

-Sunwp_posts