The Central Bank of Nigeria (CBN) on Monday revoked the operating licences of 14 banks that it described as ”unhealthy” after they failed in their efforts to recapitalise or merge with other banks.
”The operating licences of the 14 banks are hereby revoked. The Nigeria Deposit Insurance Corporation has been directed to obtain court approval to commence the process of their liquidation,” CBN Governor Charles Soludo told a news conference.
Despite failure of the banks, their individual and corporate depositors will not lose their money, Soludo said.
Twenty-five mostly private banks, including four foreign-owned banks, at the end of last month met the CBN deadline to rake up 25-billion naira ($188-million), merge or face liquidation.
The 14 banks were unable to meet the deadline and conditions set by the CBN.
The 25 banks emerged from 75 banks, out of a total of 89 banks that existed by June 2004. The successful banks account for about 93,5% of the total deposit liabilities of the banking system, he said.
The consolidation of the banks through recapitalisation is the first phase of the reform that President Olusegun Obasanjo’s government is carrying out in the banking sector of the economy to force banks to have a strong financial base.
Following the drive, the capital market received a boost with a total of 406,4-billion naira ($3-billion) raised so far and 360-billion naira ($2,7-billion) accepted by the CBN, including a foreign capital inflow of $652-million and £162 000, Soludo said.
In the early 1990s, dozens of weak and badly managed banks went under, leaving their depositors in the lurch. — Sapa-AFP