About seven weeks to the September 30 deadline given rescued banks to recapitalise, the Nigerian Deposit Insurance Corporation (NDIC) yesterday said the Central Bank of Nigeria (CBN) has revoked the operating licences of Afribank, Spring and BankPHB for failing to show enough commitment in their recapitalisation process since the new teams were named in August 2009.
Announcing the decision, 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 as from Monday.
He said that MainStreet Bank Limited has been licenced to take over Afribank Nigeria Plc, Keystone Bank Limited has assumed the assets and liabilities of BankPHB while 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, with Wema and Unity Banks resolving their troubles, while Equitorial Trust Bank, he noted, is close to recapitalisation.
He said that the remaining three banks AfribankPlc, BankPHB and Spring Bank Plc have not shown the necesary capacity and ability to recapitalise before the September 30, deadline.
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 with 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.
Addressing journalists in Lagos yesterday, Ibrahim, 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 for enhancing depositors’ protection 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.
Also, Minister of State for Finance, Dr. Yerima Lawal Ngama yesterday said the ministry was in support of the decision of NDIC to organize and incorporate bridge banks as a means of resolving the problems and deficiencies facing Afribank, BankPHB and Spring Bank.
The action, according to the minister “was taken after due consultation by the NDIC with the federal government, and represents an important milestone in the process of stabilising the banks and would enable the banks to move forward with a more certain future and bring to closure the banking crisis that started in 2008 in Nigeria.”
He added that the “federal government was pleased to note that this process has not resulted and will not result in the loss of any depositor’s funds, and more importantly, will bring stability to the financial system.
A statement issued 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.
However, the National Coordinator of Independent Shareholders Association of Nigeria, Sir Sonny Nwosu said the liquidation was an expression of the earlier threat made by Sanusi to destroy the financial institutions during his inaugural speech.
He said: “the association calls on President Goodluck Jonathan to call Sanusi to order, otherwise what they have just done is capable of destroying the entire economy if not well handled”.
Nwosu, who said September this year was the deadline for the troubled bank to recapitalize, queried the urgency to liquidate the banks despite the plethora of court orders restraining CBN from carryingout “its evils deeds.”
“You know the Minister of Finance will be resuming next week, I believe he is trying to destroy all he could before she comes on board. I said it before that Sanusi is making all effort to nationalise the banks and enslave the millions of investors in those banks”, he added.
In his contribution, the President of Progressive Shareholders’ Association, Mr. Boniface Okezie said what the CBN had just done is a crime to the entire economy.
“If CBN recently told the entire world that the apex bank injected N620 billion into the troubled banks and now he is turning around to liquidate them, he should be held accountable.
“The CBN brought the managers to manage these banks and they used the opportunity to loot the bank to these pitiable states we are seeing now. Honestly, there is hidden agenda. When did they conduct another risk test that led to the liquidation? It is a pointer of more danger for the economy.
“If the government is serious now, I think this is time to sack Sanusi and all his co-travellers. They said they recapitalize before September, why are they liquidating when the time has not reached.
Meanwhile, effort to get reaction from the Securities and Exchange Commission (SEC) proved abortive.