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CBN GIVES BANKS DATE TO RECAPITALISE OR FACE LIQUIDATION

By NBF News
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THE licence of any rescued bank that is yet to recapitalize by October 30, this year will be revoked by the Central Bank of Nigeria (CBN), which will subsequently hand it over to the Nigeria Deposit Insurance Corporation (NDIC) for liquidation.

This proclamation was made yesterday by the Governor of the CBN, Mr. Sanusi Lamido Sanusi, at an exclusive interview with The Guardian in Abuja ahead of today's scheduled press conference by the apex bank on the new banking model; operations of the Assets Management Corporation of Nigeria (AMCON) as well as mergers and acquisitions of the rescued banks.

According to Sanusi: ' By September 30, we will withdraw our inter-bank guarantees for the rescued banks and we will pull the planks and hand them over to the NDIC for liquidation.'

Though he disclosed that some of the rescued banks have recorded milestones in their merger and acquisition procedures, some still were very far away in consummating the processes that could lead to their recapitalization and pointed out that the apex bank could not just allow the process and open-ended one.

His words: ' By September 30, it will be over two years since we intervened in these banks. And the CBN has allowed the shareholders and directors of these banks to pursue their recapitalisations by looking for their own partners. But some of these directors and shareholders are not cooperating. We introduced AMCON to inject capital to these banks, but some directors are averse to this. Then we asked them to look for partners, yet some of them are not cooperating. We cannot continue like this. Now, what is left for them is to either write a cheque for us or allow AMCON inject liquidity.''

It would be recalled that sometime in October last year, the apex bank warned owners of the troubled banks in Nigeria to recapitalise them or be ready to face liquidation in line with laid down regulations.

The directive was given at a stakeholders meeting with the Board of Directors, Management and Shareholders of recued banks which was the second in the series of dialogue initiated by the Bank with the stakeholders to engender effective collaboration on the issue of recapitalising the affected banks.

The governor reassured stakeholders that having secured the depositors' fund with the reform and other measures instituted within the last few months, the focus now is to salvage some value for the shareholders. Mallam Sanusi noted that liquidation and nationalisation are not desired options, stating that he is convinced that fresh injection of capital through strategic partnership remains the best approach to quickly get these banks to safe haven.

The CBN governor allayed the fears of stakeholders, making it very clear that the CBN would not sell the banks as it is not the business of CBN to do that. The CBN, according to him, only recommended some reputable financial advisers, who, are working with the board and management of these banks to source, and negotiate with any of such investors that can create some value for the affected banks. He emphasised that the process of repackaging the banks is being driven by the boards of the affected banks, some of which have held discussions with the strategic partners without direct involvement of the CBN.

The stakeholders commended the CBN for reaching out to the shareholders and urged that the two options of liquidation and nationalization should not be considered by the CBN. On the issue of on-going litigations against the CBN, it was noted that a few individuals took the action without the consent of the seven zonal shareholders associations and that these few individuals who went to court only did so for personal reasons, adding that such individuals do not represent the opinion of the shareholders.

Stakeholders recommended that the CBN should go for the option that protects both the depositors and the shareholders and promised to consult with other shareholders to withdraw all court cases.   They also advised that the new management put in place by the CBN should be communicating with the shareholders regularly.

The governor reassured the stakeholders that the shareholders would definitely play an important role in the recapitalisation exercise and that the process of giving value to their shares is already assured with the coming on board very soon of the AMCON. However, he cautioned that should the on-going process to recapitalize the affected banks be frustrated, the CBN would have no other option than to go for liquidation as provided by the existing legal frame-work.

In conclusion, the governor reiterated that the CBN will not usurp the rights of shareholders and that the shareholders should be rest-assured that the final decision on the recapitalization of the banks rests with them.


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By: TB Joshua