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Nigerian govt takes over three banks

The Nigerian government Friday announced the take-over of three banks which were yet to sign the Transaction Implementation Agreements (TIAs) with investors aimed at injecting funds to capitalize them.

Minister of State for Finance, Dr. Yerima Lawal Nngama, named the affected banks as Afribank Nigeria Plc; Bank PhB Plc and Spring Bank Plc.

The government, by forcefully taking over the three banks, will continue to run them as going concerns to pave way for their recapitalization by the Asset Management Company of Nigeria (AMCON).

In the interim, the Nigeria Deposit Insurance Corporation (NDIC) has incorporated three bridge banks that will take over the banking activities of the former banks.

The newly incorporated companies include Mainstreet Bank Limited (to take over the management of Afribank Plc), Keystone Bank Limited (to take over Bank PhB) and Enterprise Bank (for Spring Bank Plc).

The action is with immediate effect.

This means that by Monday, all the affected banks, located across the country will begin to wear their new identities.

However, Nngama assured depositors of the affected banks that their funds are safe, assuring that the new banks would continue normal transactions as it is only the ownership and names that have changed.

The takeover is ahead of the 30 September, 2011, deadline given the rescued banks to recapitalize or lose the Central Bank of Nigeria (CBN) guarantee at the inter-bank transactions.

With this action, shareholders of these institutions may have completely lost their stakes in the banks to the Federal Government, a development the Governor of Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, had hinted since last year.

Nngama told journalists the action was taken ahead of time to stave the impending pains and harrowing experience to be robbed on depositors and institutions the affected banks may be obligated to if they are allowed to continue to operate till the advertised date of 30 September.

According to Nngama, “the action was taken after due consultation with the NDIC. This action by the Federal Government represents an important milestone in the process of stabilizing the banks and enables these banks to move forward with a more certain future. And this brings to closure the banking crisis that started in 2008 in Nigeria.”

He said “the Federal Government is pleased to note that this process has not resulted and will not result in the loss of any depositors’ fund. And more importantly, it brings stability to the financial system. In particular, I wish to emphasize that no depositors will lose one kobo. In this regard, I urge all depositors, including the ministries, departments and parastatals of the affected banks to continue to transact their businesses with the respective bridge banks.”
The CBN only Tuesday declared that with the signing of the TIA by Oceanic Bank Plc, over 80 per cent of the entire banking industry’s deposits in the country had scaled the risky and danger zone.

It, however, then declared that it was not shifting the 30 September deadline within which inter-bank guarantees for the remaining ‘troubled’  banks would be withdrawn.

The four other rescued banks that have already signed their TIAs with partners signifying readiness to pave the way for recapitalization and who have also got their inter-bank guarantee extended till December this year are Oceanic Bank, Intercontinental Bank, Finbank and Union Bank


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