AMCON chief forecloses rescued banks’ liquidation

Proshare

 

 

July 18, 2011 by Collins Nweze
The Chief Executive Officer (CEO) of Asset Management Corporation of Nigeria (AMCON), Mustafa Chike-Obi, has foreclosed the liquidation of the eight rescued banks.
 He said while liquidation remains an option, it is very unlikely, based on recent steps taken by these banks (Union Bank of Nigeria Plc, Finbank Plc, Intercontinental Bank Plc, Afribank Nigeria Plc, Oceanic Bank International Plc, Bank PHB Plc, Spring Bank Plc and Equitorial Trust Bank), which were bailed out by the apex bank with N620billion in 2009.
CBN Governor Sanusi Lamido Sanusi had threatened to liquidate any the  rescued banks that don’t meet a September 30 recapitalisation deadline following various court injunctions seeking to scuttle their deals. Recently, CBN’s  Deputy Governor, Kingsley Moghalu, said the Federal Government  may nationalise these banks if they fail to recapitalise  before the stipulated date.
But the AMCON boss in an interview with The Nation, said: “From what I am seeing, I can’t see any of the banks being liquidated. The fear of liquidation, while it remains an option, is very very unlikely.”
He said AMCON is committed to concluding the process of recapitalisation, and will assist the CBN and the banks to meet the September 30 deadline as well as achieve financial stability as quickly as possible. “If the CBN sets a deadline, what AMCON will do is to help everybody meet that deadline,” Chike-Obi said.
He disclosed that more Transaction Implementation Agreements (TIA) between the rescued banks and the core investors will be signed soon.
Chike-Obi also promised that AMCON will take the rescued banks from their current negative capital, to zero capital position, to allow the core investors move the banks’ liquidity to the right capital adequacy level. But this could only happen in banks with what he called ‘enforceable recapitalisation plans’. “AMCON by agreement will bring all the rescued banks to zero capital position, provided they have viable enforceable recapitalisation plan,” he said.
The AMCON boss said funds coming from new investors will take the banks to required capital adequacy.
He said that in recapitalisation, there are always three options involved. First, the banks have to recapitalise themselves by choosing viable partners. Union Bank, Intercontinental Bank and FinBank have followed this path.
The second option is for those, which cannot recapitalise themselves, to be recapitalised by AMCON to the right capital adequacy position by giving them lifelines from where they would operate until viable partners come in.
He said the third option is liquidation, and the thinking of AMCON is that no bank goes through this process. “Liquidation is the worst option, but from what I am seeing and hearing, it’s unlikely that any bank will be liquidated,” he reiterated.
The AMCON boss said he was pleased that the courts have ruled in its favour on what he described as ‘nuisance lawsuits’, which were serious impediments to rescued banks’recapitalisation.
Source: Nation
 
READ MORE:
Related News
SCROLL TO TOP