The African Report (TAR) reverses self, says FinBank is not stressed
Category: Oil Sector
In a July 21, 2009 press released obtained today, the authors of the TAR report on Nigerian banks, Groupe Jeune Afrique; have admitted inaccuracies in its characterization and stratification of FinBank owing to incomplete date.
In deciding to reverse itself on FinBank’s assessment, one out of the 24 banks it reported on, TAR said that “we accept that it would not be accurate to describe FinBank as a ‘stressed’ bank or in need of more capital”.
Though it tagged the subject matter of its release as Nigerian banks – signs of life; the release would be a welcome development to the Board, management, staff and customers of the bank who have had to deal with the consequences arising from the report.
This action is commended and a lesson for all public commentators on the market, given the sensitivities at this current time.
Here is the full press release.
REFERENCE: NIGERIAN BANKS - SIGNS OF LIFE
In our report on Nigeria’s financial sector in the June-July issue of The Africa Report, we made brief references to FinBank, one of the 24 banks licensed to operate in Nigeria. We based our reporting on an assessment of FinBank’s audited accounts for their financial year ended 30 April 2008, which they published in March 2009. FinBank’s audited accounts showed that the bank’s shareholder funds had fallen from N22Billion in the year April 2007 to N10Billion in the year ended 30 April 2008. As stipulated in the Banking and Other Financial Institutions Act, the Central Bank of Nigeria has to ensure that shareholder funds of a retail bank should not fall below N25 billion.
However, upon a further review of FinBank’s audited accounts for the year ended 30 April 2008, we observed in note 40 to the financial statements that following a successful public offer undertaken by FinBank in January 2008, The Securities and Exchange Commission approved the allotment of N101.5billion being additional amount raised as capital. This additional capital injection resulted in a shareholders’ fund well in excess of N100 billion which would adequately support FinBank’s level of business operations.
In the light of this strengthening of the bank’s position following its successful public offer, the introduction of new investors and a change in the structure of the bank’s ownership and its Board of directors, we accept that it would not be accurate to describe FinBank as a “stressed” bank or in need of more capital.
We are assured that the management of FinBank and its new Board of Directors are driven by strong corporate governance principles in all their business practices and that it subjects its compliance to corporate governance rules to regular appraisal and has engaged Messrs JIC Governance Plus Ratings to review the Board of directors.