CENTRAL Bank of Nigeria (CBN) has reiterated its determination to nationalise banks that are unable to meet the September 30 deadline to increase their equity, rather than forcing them to liquidate.

Speaking in Pretoria, South Africa, Deputy Governor, Financial System Stability, CBN, Kingsley Moghalu, said the Asset Management Corporation of Nigeria (AMCON), created by the apex bank to buy the bad debts of banks, may become a majority shareholder in the rescued banks by plugging their equity shortfalls.

The affected banks are Union Bank, Intercontinental Bank, Oceanic Bank and FinBank. Others are Bank PHB, Spring Bank and Afribank.

However, some of them have reached advanced stages in their recapitalisation talks with their partners.

The CBN bailed out eight of the country’s 24 banks in 2009, pumping N620 billion into the industry to prevent its collapse. The rescued banks have until the end of September to recapitalise or merge with new investors to avoid liquidation.

“The deadline is a very serious one. We have the responsibility as a systemic financial regulator to make sure the banking system is normalised by the end of the year,” Moghalu said.

While nationalisation is not the “favoured option, it is preferable to liquidation,” Moghalu said.

If AMCON takes a majority stake in a bank, it may manage the bank for a year or two before selling it, he said.

But some shareholders and former bank executives have sought to stall the recapitalisation process through court action.

Mr Erastus Akingbola, former managing director of Intercontinental Bank, and FinBank’s ex-Managing Director, Okey Nwosu, had their applications to halt the process dismissed last month.

A lack of clarity on the positions of Nigeria’s failed banks has led to “uncertainty” for investors, Fitch Ratings said on June 15. If Nigeria is “less inclined” to support the banks, there may be negative implications for the ratings on Nigerian banks, Fitch said.

“There are a number of vested interests coming to scuttle the process,” Moghalu said. “I can assure you those vested interests won’t prevail. As the regulator, we have the policies and powers to make sure we restore full financial stability one way or another.”

At least, three of the rescued banks are expected to sign agreements with investors in the coming weeks, Moghalu said, declining to elaborate further. The CBN is also investigating options aside from nationalisation and liquidation for lenders that fail to meet the September 30 deadline, he said, without giving details.

“I want to downplay the option of liquidation,” Moghalu said. “We put out the threat, but it was to concentrate people’s minds. It doesn’t mean we will wake up and liquidate banks. If people want to play rough, we have to show them we can play rough.”

Meanwhile, commercial banks can now place their Automated Teller Machines (ATM) outside their locations as the CBN has reversed its policy barring banks from erecting ATM outside their locations.

The apex bank has also disowned the United Bank of Africa (UBA) over its recently introduced N25,000 minimum cash balance for account holders.

The CBN Deputy Governor, Operations, Mr Tunde Lemo, disclosed this at the second edition of deputy governors departmental briefing of the apex bank, held at the CBN Headquarters, in Abuja, on Tuesday.

Mr Lemo, speaking on the currency management policy of the apex bank, said the Nigerian economy was too cash-oriented, adding that the resultant huge volume of cash transactions imposed tremendous costs to the banking sector.

He said the retail cash policy, which would commence on June 1, 2012, did not prohibit the withdrawal of more than N150,000, stressing that those who wished to conduct heavy transaction with their banks were free to do so within the provision of the policy.

Mr Lemo disclosed that the banks were poised and committed to an aggressive roll out of ATMs, Point-of-Sale (POS) and other electronic channels to ensure these were readily available to the high cash driven individuals and businesses.

The deputy governor stated further that the CBN and bankers’ committee were implementing an e-payment roll out programme that would deploy additional 40,000 POS and 10,000 ATMs before December 31 and 375,000 POS and 75,000 ATMs by December 2015.

He said that the CBN, in recognising the low absorptive capacity of the ATMs on the bank premises, had lifted its ban on erecting ATMs outside the banks locations, disclosing that banks were now free to erect ATMs kilometres outside their premises, to ensure the success of the cash management policy.

Noting that power was another key infrastructure, which impacted the availability of POS and ATMs, Mr Lemo said the CBN had agreed on minimum POS standard, which specified adequate battery lifespan to support uninterrupted availability of service to the terminals.

Mr Lemo said a clear directive to vacate any existing contract, which was restrictive to card usage with effect from June 1, 2012, would be issued by the CBN.
On the UBA N25,000 minimum bank balance directive to its customers, the deputy governor said the apex bank was not aware of this, except what had been written in newspapers.

“It is not CBN policy, we don’t micro-manage how banks conduct their businesses, however, we won’t be happy if any bank decides to turn back minor savers,” Lemo said.

However, UBA customers, whose accounts balances were below the minimum N25,000 threshold and are not able to upgrade between July 1 to September 1, 2011, have the option of migrating to self-service channels provided by the bank.

According to the Executive Director, Corporate and Institutional Banking, UBA, Mr Ifeatu Onejeme, the migration of customers to self-service e-banking channels and mobile payment platform, U-Mo, was being done through the various business offices of UBA, where the respective accounts were domiciled, in a simplified process, devoid of any hassles.

He reiterated that the new minimum balance was to provide service to customers, adding that U-Mo was to make life earsier for a segment of customers.
“Market is changing, things are moving positively and we cannot be static,” he said.

Commenting on the increase in the minimum balance, Mr Kennedy Uzoka, Executive Director, Resources, said the initiative was based on the continuous efforts of its management to improve on customer service delivery.

In the implementation of this new initiative, the bank was not unmindful of some of the inconveniences it would cause.

He further said salary/pension accounts, whether savings or current; overdraft/facility linked current accounts; loan accounts; savings/current accounts linked to deposits/investments and para-military/military/ex-servicemen accounts were exempted from the new minimum balance requirement.