Shareholders of Wema Bank Plc will next week meet in Lagos to decide on the future of their bank which the Central Bank of Nigeria (CBN) has asked to recapitalise by June 30, 2010.
Wema Bank is among the banks that failed last year’s CBN special audit. However, while the apex bank took over the management of the other eight banks (Afribank Plc, Finbank Plc, Intercontinental Bank Plc, Oceanic International Bank Plc, Union Bank of Nigeria Plc, Bank PHB Plc, Equatorial Trust Bank Limited, Spring Bank Plc); it left Wema Bank off the hook but injected funds into the institution alongside the eight others. Unity Bank Plc, according to the results of the audit had enough liquidity but did not have adequate capital. Consequently, Wema Bank and Unity Bank were asked to recapitalise by June.
Specifically, the banking watchdog said the new management, which took over Wema Bank last year could not be held responsible for its grave situation. SW8 Investment Limited bought into Wema Bank and took over the management last June before the CBN’s cleansing exercise of the banking industry.
THISDAY checks revealed that the management and board of the bank have begun moves to implement the CBN’s directive. To this end, the directors are requesting the shareholders to approve various strategies being considered to ensure that Wema Bank did not only recapitalise before the June 2010 deadline but also come out as a stronger institution. The strategies expected to be approved by the shareholders at the Annual General Meeting slated for February 5, 2010 include raising of fresh funds through public offering of shares, rights issue, special placing of shares to a core investor as well as merger with Skye Bank Plc.
Wema Bank Plc last week announced a loss of N46.3 billion for the year ended March 31, 2008 and N20.4 billion in March 31, 2009. Explaining the performance, the Managing Director and Chief Executive of the bank, Segun Oloketuyi, said that a major challenge for the bank is the quantum of non-performing loans and advances in the sum of N116.355 billion, which have been provisioned in the accounts - leading to erosion of the capital base.
He said the previous challenges faced by the bank have no doubt impacted adversely on its business as evidenced by the weak financial performance reported in its published accounts. He said: “In this challenge lies our greatest opportunity to recapitalise the bank through the bold initiatives that the board and management have taken to recover these non-performing loans. We are pleased by the result achieved so far. A significant amount of recoveries have been made post September 30, 2009, balance sheet date. These recoveries will improve the shareholders funds when our accounts are published for the year ending December 31, 2009."