Finbank Plc said it has achieved adequate liquidity in its business with the payment of over N40 billion to the Central bank of Nigeria, representing its exposure to the expanded discount window. Mrs. Suzanne Iroche, managing director and chief executive of the bank at a press briefing on Wednesday in Lagos said the bank has attained and surpassed the 25 per cent minimum regulatory liquidity requirement.
"We have been able to restore customers' confidence and have grown deposits by about 20 per cent in the last two months. As at today we no longer owe the CBN other than the N50 billion long term loan," she said.
In addition, the bank said it has recorded about N14 billion in its loan recovery effort and plans to recover additional N40 billion by the first quarter of next year. "All recoveries will have a positive impact on our bottom line profit and with the balance sheet cleaned up, the bank is on the path of growth."
CBN rescue Finbank came under scrutiny in August when the CBN announced the sacking of its CEO, Mr. Okey Nwosu along with his counterparts in Intercontinental Bank Plc, Oceanic Bank International Plc, Union Bank Plc and Afribank Plc. The CBN injected N420 billion into all these banks. Out of the amount, Finbank and Afribank got N50 billion each, Intercontinental Bank and Oceanic Bank got N100 billion each while Union Bank got N120 billion.
In October, the Chief Executive Officers of Bank PHB Plc, Spring Bank Plc and Equitorial Trust Bank Ltd. were also dismissed, while Wema Bank Plc and Unity Bank Plc retained their management and received capital injection.The CBN intervened in the banks as part of its efforts to sanitise the banking industry and rescue them from collapse as a result of poor risk management and weak corporate governance framework.
Restructuring Mrs. Iroche said as part of its restructuring effort, Finbank has embarked on cost reduction strategies that has reduced its operational expenses by about 15 per cent, while hinting that additional cost reduction efforts are underway to ensure larger savings by the first quarter of next year.
According to her, these efforts may include reduction in salary and staff strength in order to bring down its overall cost. "The management has also embarked on rationalisation and optimisation of resources to achieve business efficiency. We may actually move staff from one area of the bank to another.
"She explained that the bank has reviewed and re-engineered its entire risk management framework for greater efficiency and effectiveness by instituting a more robust credit risk management process, credit availment process and credit monitoring function.
"Our commitment is to enthrone strong corporate governance practices and transparency," she said.Recapitalisation While hinting that the bank may be up for acquisition, Iroche said the bank's recapitalisation effort would consider investors that would be able to bring in adequate capital. According to her, even at this preliminary stage, interested parties are already talking to the financial advisers appointed by the CBN.
"The criteria are liquidity, ability to bring in strong corporate governance, track record and the ability to add value. So existing shareholders are not kept out of the picture if they have additional fund they want to bring in." She said the central bank wants to be sure that whoever is coming in to help recapitalise the bank meets these criteria.
"The idea is that these banks should not return to the same situation they were as at August," she said, adding that the target of the bank is to focus on key areas of competence and comparative advantage