Source Next: Oluwaseyi Bangudu, January 18th 2010

Six months after the Central Bank of Nigeria commenced its industry cleansing and some nine banks were rescued, shareholders are now willing to support the recapitalisation of the affected banks.

This was one of the outcomes of a meeting between the CBN and the shareholders held on Friday in Abuja.

The Central Bank in a statement on Friday, said the objective of the meeting is to inform all stakeholders about the implementation of the second phase of the banking reforms.

“The Central Bank of Nigeria held an interactive meeting with stakeholders of 10 affected banks comprising their directors and principal shareholders on Friday, January 15, 2010. The objective of the meeting was to inform the stakeholders on plans for the implementation of the second phase of the ongoing banking sector reforms,” it said.

Present at the meeting were representatives of AfriBank Plc, Bank PHB, Equitorial Trust Bank Ltd, Finbank Plc, Intercontinental Bank Plc, Oceanic Bank International Plc, Spring Bank Plc, Unity Bank Plc, Union Bank of Nigeria Plc and Wema Bank Plc, who were represented by their board members, management and independent shareholders.

Shareholders pledge collaboration

The Central Bank said all the stakeholders that attended the event agreed to collaborate with the regulatory body on its recapitalisation process.

“All stakeholders present at the meeting unanimously agreed that the board and the principal shareholders of the affected banks will collaborate with the CBN and advisors to successfully carry out the recapitalisation of the affected banks.”

Apart from saying that the meeting was informative and acknowledged their support for the CBN reform programme, a number of stakeholders proposed that the CBN hold more of such interactive sessions with them to provide the forum for continued co-operation.

The CBN also informed the stakeholders that the Asset Management Company as proposed could provide the banks with the much needed liquidity and facilitate for their recovery.

Banks’ cleansing

On August 14, 2009, the Central Bank Governor, Sanusi Lamido Sanusi sacked the executive directors and top management staff of five of the first set of the audited banks, stating that the banks were in grave situation and that their Management have acted in a manner detrimental to the interest of their depositors and creditors.

The Special Examination, which primarily focused on assessing the health of the banks with Particular focus on liquidity, capital adequacy and corporate governance, also saw the sacking of three more bank chiefs and their top management members of staff after the next set of audit result was released.

Shortly after the last set of audit result was released in October, the Central Bank issued a statement assuring that the worst was over in the banking sector and that the affected banks are being stabilised and strengthened, and that with the return of confidence in the industry, the Nigerian banking sector is stronger and safer.

“However, the CBN will remain vigilant and pro-active to ensure that the situation gets even much better. CBN’s immediate priority is to stabilise the five banks. This is the same priority for the three newly affected ones. The next steps will be taken after careful review of available options and in due consultations with the banks’ shareholders,” the circular said.

The Central Bank also gave the assurance that it will remain vigilant and put in place measures to prevent a repeat. “Going forward, CBN will focus on strengthening its own regulatory capacity; fast-tracking the implementation of risk-based, consolidated and cross border supervision frameworks; working with other stakeholders to fast-track the establishment of an assets management company; easing the flow of credit, particularly to the real sector of the economy; improving governance structures and practices in the financial services sector; and improving confidence in the economy in general.”

Nigerian Bank Nigeria Afribank Nigeria Plc, Bank PHB Plc, CBN Central Bank Of Nigeria, ETB Equitorial Trust Bank Plc, Finbank Plc, Intercontinental Bank Plc, Oceanic Bank International Plc, Spring Bank Plc, Union Bank of Nigeria Plc, Unity Bank Plc, Wema Bank Plc