CBN Nigeria to liquidate Rescued Banks by September

The Central Bank of Nigeria (CBN) has given September 30 deadline for the rescued banks to get acquired or   face  liquidation. The Deputy Governor, Financial System Stability, Dr Kingsley Muoghalu, briefing the

media on happenings within his directorate in the last one year, said negotiations were still on concerning some of the banks, promising that the apex bank would ensure that  mergers and acquisitions outcome conformed with financial service stability.

Already, he said three banks namely, Intercontinental Bank, Fidelity Bank and Union Bank,  had concluded their negotiations on mergers and acquisition and would be holing their court ordered meeting where shareholders would approve the new structure by July 15, 2011.

Disclosing that other rescued banks  were in the process of negotiations, Dr Muoghalu, however, stated that shareholders in these banks were stalling the process of mergers and acquisitions in them.

The CBN Deputy Governor said if by September 2011, mergers and acquisitions had not taken place in the remaining rescued banks as a result of shareholders agitations, the apex bank would involve its authority under the CBN Act, BOFIA and NDIC Act to liquidate those banks.

He said the apex bank had also come out with  measures to restore sanity in the board of directors of banks such as the review of membership of such boards.

In furtherance of the November 2010 abolition of Universal Banking, the Central Bank of Nigeria (CBN)  came out with three new categorisation models for banks.

The new categories are Commercial Bank model, Merchant Bank model and Specialised Bank model.

He disclosed that following a circular on regulation of scope of banking activities and auxiliary matters issued on November 30, abolishing the universal banking model, the apex bank had decided to return the Nigerian banking system to the narrow banking model
With the narrow banking model, the deputy governor said banks would now concentrate on real banking activities, stressing that no bank could perform all activities at the same time.

Disclosing that banks were not supposed to engage in capital market activities, Dr Muoghalu said the apex bank abolished the concept of universal banking to save depositors fund and prevent speculative activities on the path of banks management.

Explaining the details of the banks categorisation, the deputy  governor said in the Commercial Bank  category, there were Commercial Bank International with a share capital of N50billion, Commercial National, with a share capital of N25 billion and Commercial Bank with a share capital of N10 billion.

Banks in this category are Access Bank, Guaranty Trust Bank, Diamond Bank, Spring Bank, Zenith Bank, Fidelity Bank, UBA, First City Monument Bank and First Bank( UBA, FirstBank and FCMB will operate as holding company)

Banks in the commercial bank national are ECO Bank, Standard Limited Bank, Sterling Bank, Unity Bank, CitiBank and Stanbic Plc/( Stanbic will operate as holding company model).