By Obinna Chima

06 Jul 2011


Following the criticisms that trailed its proposal to liquidate the rescued banks if they fail to recapitalise by September 30, the Central Bank of Nigeria (CBN) has soft-pedalled as it is now weighing nationalising the banks.

The CBN said that it was considering making the Asset Management Corporation of Nigeria (AMCON) the majority shareholder in the rescued banks by plugging their equity shortfalls if they were unable to recapitalise before the deadline.

AMCON is an instrument of the Federal Government set up to bail out the rescued banks by acquiring their toxic assets.

Bloomberg quoted Deputy Governor, Financial System Stability, CBN, Dr. Kingsley Moghalu, as saying this Tuesday in Pretoria, South Africa.

Moghalu disclosed that nationalising the affected banks was a more likely alternative if some of them did not find investors or merging partners – rather than forcing them to liquidate.

The CBN had given the rescued banks till September 30 to recapitalise, failing which they might be liquidated.

CBN Governor, Mallam Sanusi Lamido Sanusi, had however pointed out that liquidating the affected banks was the apex bank’s last option.

Finbank Plc, Intercontinental Bank Plc, Spring Bank and Union Bank of Nigeria Plc have all identified their preferred investors.

Similarly, Oceanic International Plc recently said it had shortlisted three investors and that it would make an official announcement this month.

According to Moghalu, “The deadline is a very serious one. We have the responsibility as a systemic financial regulator to make sure the banking system is normalised by the end of the year. While nationalisation is not the favoured option, it is preferable to liquidation. If AMCON takes a majority stake in a bank, it may manage the bank for a year or two before selling it on.

“Stability in the short term has been achieved. The banking system is functioning. We are working towards medium to long-term stability, but for that to happen, we must resolve the eight banks in which we’ve intervened.”

Besides, Moghalu said the apex bank was also considering other options apart from nationalisation and liquidation for the rescued banks which might not meet the deadline. He however did not outline the other options.

“I want to downplay the option of liquidation. We put out the threat, but it was to concentrate people’s minds. It doesn’t mean we will wake up and liquidate banks. If people want to play rough, we have to show them we can play rough,” he said.

The deputy governor however lamented that there was a lot of vested interests working against the recapitalisation process.

Notwithstanding, he said, at least three of the rescued banks were expected to sign agreements with investors in coming weeks. He declined to give details.

“There are a number of vested interests coming to scuttle the process. I can assure you those vested interests won’t prevail. As the regulator, we have the policies and powers to make sure we restore full financial stability one way or another,” he added.

Commenting on the development, banking analyst at Renaissance Capital, Mr. Adesoji Solanke, advised the management teams of Union Bank, FinBank and Intercontinental Bank which he said were clear on their recapitalisation plans to announce their Transaction Implementation Agreements (TIAs).

Solanke said in an e-mail to THISDAY Tuesday: “The three banks mentioned earlier should announce the signing of their TIA very soon; proceed to get regulatory approval; then hold required shareholder meetings. The 30 September deadline is firm and quickly approaching, and for the intervened banks to successfully scale all regulatory hurdles, the earlier mentioned events must kick off this month or early August, given statutory timelines required to hold certain meetings.”

This option is better.That liquidation is must never be considered again!

Dont mind the confused governor

@da doctor.searoiusly confuse i must say.i wounder if dis mallam tink b4 e speak.just because d former MD's got an interim injunction frm court made sanusi come out wit liquidation treat.But d deed has been done d banks lost almost a billion deposit cos of dis needless statemnt

Dont mind him! Now Ng has come, u get it rite? OKONJO