{"id":413483,"date":"2011-05-01T23:00:00","date_gmt":"2011-05-01T23:00:00","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/05\/01\/cbn-faces-dilemma-over-5-sick-banks-%e2%80%a2banks-yet-to-attract-new-investors-%e2%80%a2election-spending-cbn-battles-liquidity-in-financial-system\/"},"modified":"2011-05-01T23:00:00","modified_gmt":"2011-05-01T23:00:00","slug":"cbn-faces-dilemma-over-5-sick-banks-%e2%80%a2banks-yet-to-attract-new-investors-%e2%80%a2election-spending-cbn-battles-liquidity-in-financial-system","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/05\/01\/cbn-faces-dilemma-over-5-sick-banks-%e2%80%a2banks-yet-to-attract-new-investors-%e2%80%a2election-spending-cbn-battles-liquidity-in-financial-system\/","title":{"rendered":"CBN faces dilemma over 5 sick banks \u2022Banks yet to attract new investors \u2022Election spending: CBN battles liquidity in financial system"},"content":{"rendered":"
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|\u00a0Print\u00a0|<\/a>\u00a0E-mail<\/a><\/p>\n

Written by Odidison Omankhanlen, Lagos<\/span> Monday, 02 May 2011<\/span><\/p>\n<\/div>\n

THE Central Bank of Nigeria (CBN) is currently in a dilemma over the inability of five of the eight banks<\/p>\n

that failed the stress test in the industry in 2009 to get suitable partners.<\/p>\n

The banks, which are yet to announce recapitalisation plans include Bank PHB, Spring Bank, FinBank, Oceanic Bank and Equitorial Trust Bank.<\/p>\n

These are among the eight banks that were bailed out with N620 billion by the CBN, having failed the stress test carried out in the industry by the regulators.<\/p>\n

Top executives of the CBN like the governor, Mallam Lamido Sanusi, the deputy governor, Financial System Stability (FSS), Dr Kingsley Moghalu and the director, Banking Supervision, Samuel Oni, had, at various forums in March, said that the affected eight banks would get new owners in a couple of weeks.<\/p>\n

However, two months after, only three of the eight bailed out banks have announced new plans. Intercontinental Bank is holding merger talks with Access Bank, while Union Bank announced a $750 million deal with a consortium led by the African Capital Alliance, a private equity firm.<\/p>\n

Also, Afribank has signed a recapitalisation agreement with a private equity consortium, Vine Capital.<\/p>\n

To meet the deadline of second quarter, which had been shifted many times, the CBN is mounting pressure on healthy banks and some foreign financial institutions to express bids on the affected banks.<\/p>\n

A top bank chief, who craved anonymity, confirmed to the Nigerian Tribune that the banking watchdog was indeed encouraging them to show interest in the sick banks, stressing that in the coming years, the industry would witness takeovers and business combinations.<\/p>\n

He, however, explained that the apex regulatory body of the banking sector was not influencing the various discussions but was encouraging the healthy banks to bid for the failed banks.<\/p>\n

Only recently, Oceanic Bank announced discontinuation of further merger and acquisition discussions with FirstBank, citing the inability of both banks to agree on commercial considerations.<\/p>\n

According to a statement from the bank, \u201cin a bid to put its recapitalisation plans into proper perspective, the board and management of Oceanic Bank wishes to inform all stakeholders that it has been in discussions with FirstBank regarding a possible merger and acquisition and have reached a mutual agreement to discontinue further discussions, owing to the inability of both parties to agree on a commercial consideration. This is due to the offer as presented by FirstBank, not being acceptable to the board of Oceanic Bank.\u201d<\/p>\n

It noted that the bank had several other alternatives with regard to ongoing recapitalisation plans, all of which will be explored accordingly, assuring all stakeholders that it remains committed to recapitalisation efforts and will unfold a strategic road map in the next couple of weeks.<\/p>\n

Meanwhile, apparently in its bid to stem the rising liquidity in the system and increasing dominance of cash in the economy, occasioned by election spendings, the CBN has rolled out measures such as increased treasury bills sales and set a daily cumulative limit on free cash withdrawals and lodgments by individual and corporate customers respectively with banks.<\/p>\n

Currently, the amount of money in circulation has recorded progressive increase in the last six months, a development analysts attributed to the elections in the country. In December, the money in circulation was N1.38 trillion but moved to N1.42 trillion in March.<\/p>\n

Only last week, the apex bank mopped up N77 billion through the use of treasury bills instrument. Treasury bills are part of monetary control measures to help banks manage their liquidity.<\/p>\n

A breakdown shows that the CBN sold N76.73 billion in 91-day and 182-day treasury bills on Thursday.<\/p>\n

Also last week, the apex bank introduced a new policy that puts a limit on withdrawal by both individuals and corporate organisations.<\/p>\n

The policy, which takes effect on June 1, only allows both individuals and corporate organisations to withdraw not more that N150,000 and N1 million respectively. It stipulated various penalties on contravention.<\/p>\n

To ensure the competitiveness of the local currency POS transactions, the apex bank directed that no card scheme, foreign or local, shall operate exclusive acquirer agreement or contract in Nigeria with effect from June 1, 2011, stating that any payments scheme, processor, switching company, service provider or bank that contravenes this policy may be suspended for a minimum of one month as a processor, switching company, service provider, among others, in the first instance and the licence may be withdrawn if the contravention is repeated.<\/p>\n<\/div>\n

See the article here:
\nCBN faces dilemma over 5 sick banks \u2022Banks yet to attract new investors \u2022Election spending: CBN battles liquidity in financial system<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

|\u00a0Print\u00a0| \u00a0E-mail Written by Odidison Omankhanlen, Lagos Monday, 02 May 2011 THE Central Bank of Nigeria (CBN) is currently in a dilemma over the inability of five of the eight banks that failed the stress test in the industry in 2009 to get suitable partners. The banks, which are yet to announce recapitalisation plans include Bank PHB, Spring Bank, FinBank, Oceanic Bank and Equitorial Trust Bank. 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