The Central Bank of Nigeria (CBN) has liquidated 13 commercial banks which failed in their efforts to recapitalise or merge with other banks, the CBN said on Tuesday in an official statement.
Twenty-five mostly private banks at the weekend met the CBN December 31 deadline to rake up 25-billion naira ($188-million), merge or face liquidation.
The 13 banks were unable to meet the deadline and conditions set by the CBN.
”The general banking public is therefore advised to henceforth transact their banking business with only these 25 banks,” the CBN statement said.
The unfortunate banks account for only 6,5% of the deposits share of the industry while 76 banks account for the remaining 93,5%, the statement said.
Private sector depositors are assured of the safety of their deposits ”trapped” in these failed banks as the CBN has concluded arrangements for ”smooth resolution of these banks at the least possible cost to the system”, the text said.
The consolidation of the banks through recapitalization is the first phase of the reform President Olusegun Obasanjo’s government is carrying out in the banking sector of the economy to force banks to have a strong financial base.
The CBN had on July 6, 2004 set last December 31 as the deadline for the erstwhile 89 commercial banks in the country to raise 25-billion naira capital through merging or acquisition.
The recapitalisation drive has seen between two and five banks merging to form a formidable one after raising the needed capital.
Before now, a bank needed to have only about two billion naira to operate.
Following the drive, the capital market received a boost with a total of 406-billion naira ($3-billion) raised so far and 360-billion naira ($2,7-billion) accepted by the CBN including foreign capital inflow of $654-million and £161 993, the CBN said.
In the early 1990s, tens of weak and badly managed banks went under, leaving their depositors in the lurch. Some of these banks folded as they failed to take sufficient guarantees or collaterals from their creditors.
CBN governor Charles Soludo said recently that a list of individuals and agencies heavily indebted to banks would soon be forwarded to the anti-graft agency and the police for prosecution. ‒ Sapa-AFP