CBN Extends Unity, Wema Bank Recapitalisation Deadline
Category: Capital Market
By Emele Onu, 06.29.2010
The Central Bank of Nigeria (CBN) yesterday extended the recapitalisation deadline it gave Unity Bank and Wema Bank by three months.Both banks had been given till tomorrow, June 30 to recapitalise or face the axe of the apex financial institution.
The CBN said in a statement signed by its Head of Corporate Communications, Muhammed Abdullahi that the banks now have up to September 30, to complete the recapitalisation process. The banking watchdog noted the progress by the boards of the two banks on their recapitalisation and said it was satisfied by their efforts.
It said the extension of the deadline became impetrative due to unanticipated three months extension in timeline for setting up the Asset Management Corporation of Nigeria (AM-CON).“We wish to inform the general public that due to unanticipated three months extension timeline for setting up Asset Management Corporation of Nigeria (AMCON), the Central Bank of Nigeria has granted a three months extension for the two banks to recapitalise. The Central Bank of Nigeria is fully abreast of the significant progress made by the boards of the two banks on their recapitalisation and is satisfied with the efforts.
“It is our hope that with the progress made so far, the two banks should be recapitalised by the end of September 2010 through the combination of sale of toxic assets to AMCON and injection of fresh capital,” CBN said.Following the result of the joint examination on 10 banks by the CBN and the NDIC, as released on October 2, last year, Wema Bank was found lacking in the two financial parameters for the test, namely liquidity and capital but its executive management was not removed because they represented new investors and were new in the management of the bank and so could not take the blame for the rot in the financial institution. The management was however, urged to recapitalise the bank not later than June 30, 2010.
Unity Bank on its part was adjudged in the same examination to have insufficient capital but not in grave situation because it had a healthy liquidity position and was well managed. The management was also asked to recapitalise latest tomorrow.Also yesterday, the CBN Governor, Sanusi Lamido Sanusi said the banking watchdog expects three foreign banks, a number of private equity houses and local financial institutions to submit offers for the rescued banks by mid-July.Sanusi told Bloomberg News in an interview yesterday in Basel, Switzerland that the interested parties are undertaking detailed due diligence.
“We have got three international banks that have remained in the serious running to acquire banks. There is also a number of local banks and private equity firms. By the middle of August we should actually have clear visibility on at least five of the banks,” he said.According to the Governor, securing a future for Union Bank, Oceanic, Intercontinental, Bank PHB and Afribank among others is the priority of the CBN as these banks are the most systematically important to Nigeria.
Sanusi also said he sees no reason now for a change in the benchmark interest rate, adding : “A rate cut at this particular moment in time doesn’t appear to be necessary. There is no compelling imperative at this point to review the interest rate stance.”