Cash injection for nationalized Nigerian banks
Source: Bloomberg News |
August 9, 2011, Tuesday
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Print Edition
Print Edition
NIGERIA injected 679 billion naira (US$4.5 billion) through bond sales yesterday into three banks nationalized by the government at the weekend, a further step in restoring stability in the banking system of Africa's biggest oil producer.
The Asset Management Corp of Nigeria, or Amcon, took over Afribank Plc, Bank PHB Plc and Spring Bank Plc last Saturday, after the central bank revoked their licenses the day before because they were unlikely to meet a September 30 deadline to recapitalize. Amcon, which assured depositors they won't lose their money, yesterday appointed a new board for the lenders that were renamed Mainstreet Bank Ltd, Keystone Bank Ltd and Enterprise Bank Ltd respectively.
This action is the latest by the Central Bank of Nigeria, led by Governor Lamido Sanusi, to clean up the industry. In 2009, Sanusi fired the chief executives of eight of the country's 24 lenders after a debt crisis threatened the industry with a collapse, and injected 620 billion naira to rescue lenders. Amcon was set up by the government to buy the bad debt of banks, estimated at US$10 billion.
"The nationalizations bring to an intermediate end a sorry chapter in Nigeria's recent banking history," Sebastian Spio Garbrah, managing director of New York-based DaMina Advisors LLP, a frontier-market risk adviser, said in an email to clients today. "Nigeria's banks today are safer than many" in developed countries, he said.
Amcon yesterday appointed Jacob Ajekigbe, a former managing director of First Bank of Nigeria Plc, as chairman of Keystone Bank and Oti Ikomi as managing director, it said in a statement. Falalu Bello was named chairman of Mainstreet Bank, with Faith Tuedor-Matthews the managing director. Emeka Onwuka, a former managing director of Diamond Bank Plc, was appointed chairman and Ahmed Kuru managing director of Enterprise Bank.
The injection into the new banks will raise their capital adequacy ratio to the required 15 percent, and also enable them to repay the capital provided by the central bank in 2009, Amcon's Managing Director Mustafa Chike-Obi said last Saturday.
The Securities and Exchange Commission suspended the shares of Afribank, Bank PHB and Spring, it said yesterday.
Nigeria's financial crisis of 2009 has now been resolved, central bank Deputy Governor Kingsley Moghalu said last Saturday. All banks in the country will be adequately capitalized by October 1, and "all major systemic" challenges would be resolved by the year end, he said.
The central bank gave the eight banks it bailed out up to September 30 to recapitalize or face liquidation.
"Those three banks, in the assessment of the Central Bank of Nigeria, could not have met the deadline," Moghalu said. "There was no need to prolong the situation."
The Asset Management Corp of Nigeria, or Amcon, took over Afribank Plc, Bank PHB Plc and Spring Bank Plc last Saturday, after the central bank revoked their licenses the day before because they were unlikely to meet a September 30 deadline to recapitalize. Amcon, which assured depositors they won't lose their money, yesterday appointed a new board for the lenders that were renamed Mainstreet Bank Ltd, Keystone Bank Ltd and Enterprise Bank Ltd respectively.
This action is the latest by the Central Bank of Nigeria, led by Governor Lamido Sanusi, to clean up the industry. In 2009, Sanusi fired the chief executives of eight of the country's 24 lenders after a debt crisis threatened the industry with a collapse, and injected 620 billion naira to rescue lenders. Amcon was set up by the government to buy the bad debt of banks, estimated at US$10 billion.
"The nationalizations bring to an intermediate end a sorry chapter in Nigeria's recent banking history," Sebastian Spio Garbrah, managing director of New York-based DaMina Advisors LLP, a frontier-market risk adviser, said in an email to clients today. "Nigeria's banks today are safer than many" in developed countries, he said.
Amcon yesterday appointed Jacob Ajekigbe, a former managing director of First Bank of Nigeria Plc, as chairman of Keystone Bank and Oti Ikomi as managing director, it said in a statement. Falalu Bello was named chairman of Mainstreet Bank, with Faith Tuedor-Matthews the managing director. Emeka Onwuka, a former managing director of Diamond Bank Plc, was appointed chairman and Ahmed Kuru managing director of Enterprise Bank.
The injection into the new banks will raise their capital adequacy ratio to the required 15 percent, and also enable them to repay the capital provided by the central bank in 2009, Amcon's Managing Director Mustafa Chike-Obi said last Saturday.
The Securities and Exchange Commission suspended the shares of Afribank, Bank PHB and Spring, it said yesterday.
Nigeria's financial crisis of 2009 has now been resolved, central bank Deputy Governor Kingsley Moghalu said last Saturday. All banks in the country will be adequately capitalized by October 1, and "all major systemic" challenges would be resolved by the year end, he said.
The central bank gave the eight banks it bailed out up to September 30 to recapitalize or face liquidation.
"Those three banks, in the assessment of the Central Bank of Nigeria, could not have met the deadline," Moghalu said. "There was no need to prolong the situation."
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