Shake Up As CBN Revokes Banks’ Licenses

The operating licenses of three Nigerian banks have been revoked by the Central Bank of Nigeria. The affected banks are Afribank, Spring Bank and Bank PHB. Incidentally, the banks were among the eight financial institutions rescued by the Central Bank in 2009. Their managements were sacked and capital was injected to keep them running. Street Journal gathered that the revocation became necessary as the banks have shown neither capacity nor ability to recapitalizes before the deadline set for September, 30.
According to Umaru Ibrahim, the Managing Director of the National Deposit Insurance Corporation (NDIC), assets and liabilities of the affected banks have been transferred to Bridge Banks with effect from August 5, 2011.
With the transfer, Enterprise Limited Bank takes over the assets and liabilities of Spring Bank while the assets and liabilities of Afribank PLC have been taken over by Main Street Bank Limited. Those of Bank PHB have been taken over by Keystone Bank Limited.
Street Journal found out that the Bridge Banks will be run by the NDIC and the transfer had to be effected in order to protect depositors’ funds.
Defending the revocation, the Managing Director of the NDIC disclosed that “this move became necessary to restore the confidence of the stakeholders in the banking industry. The banks would still be run as a going concern by the NDIC through the Bridge Banks mechanism.” He also pointed out that the management of the banks which were appointed by the Central Bank of Nigeria would cease to be CBN employees and will henceforth be under the NDIC.
According to Ibrahim, the Bridge Bank option was the only way to avoid outright liquidation which would have adverse effects on the depositors and might also cause loss of confidence in the country’s banking system. He however disclosed that in spite of the change, depositors would still have access to their funds and also transact business as usual.
A statement issued by the Central Bank of Nigeria shows the apex bank’s support for the transfer of assets and liabilities as it reads in part “the CBN is aware and supports the decision of the NDIC to exercise its statutory powers under the NDIC Act.”

Author: NewsAdmin

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