Update: CBN Revokes SpringBank, AfriBank and BankPHB licences

The Nigeria Deposit Insurance Corp (NDIC) has taken over the running of three banks rescued in a $4 billion bailout because they looked unlikely to meet a Sept. 30 central bank recapitalization deadline.

Assets and liabilities of Springbank (SPRINGB.LG), Afribank (AFRIBAN.LG) and Bank PHB (PLATINU.LG) have been transferred to newly-formed bridge banks, in the interest of depositors and to prevent possible liquidations, NDIC said.

“Four of the (nine) rescued banks are in the process of concluding merger plans. The three banks have not shown necessary capacity and ability to recapitalize before the September deadline,” said NDIC Managing Director Umaru Ibrahim.

Assets from Springbank were transferred to a newly-formed Enterprise Bank Ltd, Afribank to Mainstreet Bank Ltd, and Bank PhB were transferred to Keystone Bank Ltd, the regulator said.

The central bank said in a statement it had granted licenses and extended interbank guarantees to the three bridge banks and guaranteed the safety of deposits moved into banks.

“The NDIC, in its role as insurer of deposits and in pursuance of express statutory powers, acted to ensure that public confidence in the nation’s banking system is not eroded and that depositors’ funds are safe,” the CBN statement said.

The central bank had said the banks had until the end of September to reach recapitalization deals with new investors or face liquidation if they refuse to accept funds from a state “bad bank,” which would effectively mean nationalization.

“By taking action before the end-September … the authorities may well be hoping to effect a faster financial sector resolution, thus avoiding the risk of sharply higher interbank rates, or possibly even runs against the rescued institutions,” said Razia Khan, Head of Africa Research at Standard Chartered.

“By announcing these measures late on a Friday afternoon, after the close of markets, the authorities are also allowing time for the markets to digest the implications, and perhaps clarify any outstanding issues,”

Source via Reuters