As CBN’s 140512 deadline approaches, few banks have complied
Friday, January 27, 2012 8:57 AM
As the May 14, 2012 deadline for Deposit Money Banks to divest from non-banking operations draws nearer, there are concerns that few banks have complied with the divestment directive which was sequel to the repeal of the universal banking model, which allowed banks to render different forms of financial services.
According to the National Insurance Commission, no fewer than 12 banks either have whole or substantial stakes in the insurance sector.
The Commissioner for Insurance, Mr. Fola Daniel, said that only a few of the insurance firms had concluded and sent their divestment plans to the National Insurance Commission.
“As at now, many of the firms are still talking and have not yet concluded their divestment plans. Some foreign investors have, however, bought stakes in some of the subsidiaries,” he said.
Currently, the NAICOM boss added, it was not possible to give the percentage of stakes that were sought by the foreign and local investors in the banks’ insurance subsidiaries because the divestment process was still in progress.
According to him, NAICOM is interested in matters that concern the insurance subsidiaries of the banks and the investors that will take over them.
Because of the long-term funds in life insurance business, Daniel said a life insurance company could not be allowed to go down, but should be taken over by or merged with another stronger firm.
“The banking institutions owning insurance companies are actually divesting and we are quite satisfied with the progress recorded in that area,” he said.
The commissioner gave an assurance that NAICOM had put in place appropriate measures to ensure that no stakeholder was short-changed or put in a disadvantaged position as a result of the divestment.
Investigation also revealed that foreign investors were showing more interest than local investors in buying the bank-owned insurance companies.
Following the repeal of the universal banking model last year, NAICOM officially inaugurated an advisory committee to monitor the divestment process.
The committee was to review the apex bank’s divestment directive as it concerned the bank-owned insurance companies; and identify risk and challenges in the implementation of the divestment from the perspective of policyholders’ protection and corporate governance.
When the CBN repealed the universal banking model last year, Guaranty Trust Bank Plc was the first to announce the sale of its 67.68 per cent equity stake in GTA to Assur Africa Holding, while a foreign investor also indicated interest in ADIC Insurance.
Unity Bank Plc expressed readiness to sell its stake in UnityKapital Assurance to the shareholders of its parent company; while Zenith Bank Plc said it was divesting from its two subsidiaries, Zenith Life Assurance and Zenith General Insurance.
Oceanic Bank International Plc is currently processing its divestment from both the life and general insurance companies under the Oceanic Insurance Group.
Some of the firms that are opting for group holding include UBA Metropolitan Life, a subsidiary of United Bank for Africa Plc, and Union Assurance, a subsidiary of Union Bank of Nigeria Plc.
Source: Information obtained from a Punch News Report on extension