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| Deputy Governor, Financial System Stability, Central Bank of Nigeria, Dr. Kingsley Moghalu |
With the decision, the CBN will continue to guarantee financial transactions of the three banks with others till the end of the year.
The Deputy Governor, Financial Systems Stability, CBN, Mr. Kingsley Moghalu, said this in Lagos at a press conference.
He said, “The CBN hereby announces that the recapitalisation process has reached a significant milestone with three of the rescued banks having moved beyond Memorandum of Association to the signing of Transaction Implementation Agreements with strategic partners.
“Accordingly, the CBN has now extended the inter-bank guarantee for these three banks until December 31, 2011.”
The CBN had given the eight rescued banks that received its N620bn bail-out package in 2009 a September 30 deadline to recapitalise or face liquidation because it could not afford to keep the inter-bank guarantee in place indefinitely.
The banks are Intercontinental Bank, Equitorial Trust Bank Limited, Spring Bank Plc, Union Bank, Bank PHB Plc, Afribank Nigeria Plc, Finbank and Oceanic Bank International Nigeria Plc.
Moghalu said the remaining five banks were making progress in their discussions with prospective investors, adding that they were expected to move to the next stage soon, after which they would be granted a similar extension.
He said if any of the banks did not meet the deadline; the apex bank would take the necessary line of action.
“When we get to that bridge, we will cross it, but we remain firm on the deadline and we expect all banks to meet it. Now that we have TIAs with three banks, the next major step is to seek regulatory approval and shareholders’ approval, which is likely to take approximately two months,” Moghalu said.
He noted that with the signing of the legally binding TIAs by the three banks, the CBN had been able to resolve about 50 per cent of the problems in the banking sector.
He added, “We hope the shareholders will give their approvals. Negotiations are not the responsibility of shareholders; the board is responsible for negotiations. The shareholders are only responsible for approval or disapproval.
“If we are to prioritise, the depositors are the number one on our priority list because it is estimated that 80 per cent of the amount used in running banks belongs to depositors, while 20 per cent comes from shareholders.”
Moghalu said the CBN had cancelled the MoU between Afribank Plc and Vine Capital Partners Limited.
“The CBN decided to cancel the deal after scrutinising the bidder and cited questionable profile of the acquiring firm. We even heard that they were planning to buy two rescued banks at the same time. Afribank is now open to discussion with any foreign investor,” he said.
Some dailies had reported that the MoU signed by Afribank and Vine Capital and Phoenix Acquisition Company Limited as regards the recapitalisation of the former had been cancelled, following the disapproval of the deal by the CBN.
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