Tension in Rescued Banks over Liquidation Threat

CBN Head Office, Abuja

Anxiety has continued to sweep through some of the Central Bank of Nigeria (CBN) rescued banks since the threat by the apex bank to liquidate any of the banks that fails to recapitalise by September 30.

THISDAY investigation in some of the banks showed that the workers who discussed the development in hushed tones, were becoming apprehensive over the security of their jobs.

Governor of the Central Bank of Nigeria (CBN) had informed THISDAY that liquidating the banks that fail to recapitalise before the deadline will be the last option. The apex bank had also said it will withdraw its interbank guarantee by September 30, if the banks fail to recapitalise.

Some workers of the affected banks, who spoke with THISDAY on conditions of anonymity, also disclosed that they have been receiving enquiries from customers on the position of the banks. The official argued that the pronouncement by the apex bank may trigger panic in the affected banks.

“Most of the customers are nervous about what would become of their funds in the bank if we fail to meet the September deadline,” a bank official, who pleaded anonymity, said.

The bailed-out banks include: Afribank Nigeria Plc, Bank PHB Plc, FinBank Plc, Intercontinental Bank Plc, Oceanic Bank International Plc, Spring Bank Plc and Union Bank of Nigeria Plc.

While Intercontinental Bank Plc has signed a Memorandum of Understanding (MoU) with Access Bank Plc, it was recently reported Afribank Plc had jettisoned the working agreement it signed with Vine Capital Limited.

But, the MoU signed between FinBank Plc and First City Monument Plc as well as that of Union Bank and Africa Capital Alliance are currently been challenged in court.

Responding to the development, Banking Analyst, Renaissance Capital, Mr. Adesoji Solanke, insisted that the liquidation option being considered by the apex bank will create economic, social and banking-specific issues for the banking industry as well the economy at large, despite the opportunities it presents for the clean banks.

Solanke added: “It throws up a multitude of issues, especially from the systemically important banks – job losses, infrastructure decay, reduced customer confidence in the sector etc., which are soft but real issues that would take time to bed down. Nevertheless, we believe the Nigerian banking system is stronger today post-CBN intervention, and clearly the sector is consolidating. The big are getting bigger, the small are going niche or setting themselves up for future acquisitions, while few may fall on the way side.”

THISDAY checks also showed that the fear over the continuous existence of the bank also affected the share performance of the banks on the Nigerian Stock Exchange (NSE) last week.

Imaging, Oceanic Bank which stood at N1.76 per share last Tuesday, have so far dropped significantly by 18 per cent in five trading sessions to N1.45 per share on Monday. Similarly, a price of N1.09 per share since May 17, slumped to N1.04 per share on Monday, due to panic by investors. Bank PHB also dropped 13 per cent to close at N1.01 per share on Monday, from N1.16 last week Tuesday.