Nigeria to Inject $4.5B Into Nationalized Banks – Bloomberg

Nigeria will inject 679 billion naira ($4.5 billion) through bond sales today into three

banks nationalized by the government this weekend, a further step in restoring

stability in the banking system of Africa’s biggest oil producer.

The Asset Management Corp. of Nigeria, or Amcon, took over Afribank Plc, Bank

PHB Plc (PLATINUM) and Spring Bank Plc (SPRINGBK) on Aug. 6 after the central

bank revoked their licenses the day before because they were unlikely to meet a

Sept. 30 deadline to recapitalize. Amcon, which assured depositors they won’t lose

their money, yesterday appointed a new board for the lenders that were renamed

Mainstreet Bank Ltd., Keystone Bank Ltd. and Enterprise Bank Ltd. respectively.

This action is the latest by the Central Bank of Nigeria, led by Governor Lamido

Sanusi, to clean up the banking industry. In 2009, Sanusi fired the chief executives

of eight of the country’s 24 lenders after a debt crisis threatened the industry with a

collapse, and injected 620 billion naira to rescue lenders. Amcon was set up by the

government to buy the bad debt of banks, estimated at about $10 billion.

“The nationalizations bring to an intermediate end a sorry chapter inNigeria’s recent

banking history,” Sebastian Spio Garbrah, managing director of New York-based

DaMina Advisors LLP, a frontier-market risk adviser, said in an e-mail to clients

today. “Nigeria’s banks today are safer than many” in developed countries, he said.

New Boards

Amcon yesterday appointed Jacob Ajekigbe, a former managing director of First

Bank of Nigeria Plc, as chairman of Keystone Bank and Oti Ikomi as managing

director, it said in an e-mailed statement. Falalu Bello was named chairman of

Mainstreet Bank, with Faith Tuedor-Matthews the managing director. Emeka

Onwuka, a former managing director of Diamond Bank Plc, was appointed chairman

and Ahmed Kuru managing director of Enterprise Bank.

The injection into the new banks will raise their capital adequacy ratio to the required

15 percent, and also enable them to repay the capital provided by the central bank in

2009, Amcon’s Managing Director Mustafa Chike-Obi said on Aug. 6.

The Securities and Exchange Commission suspended the shares of Afribank, Bank

PHB and Spring, it said in an e-mailed statement yesterday.

Nigeria’s financial crisis of 2009 has now been resolved, central bank Deputy

Governor Kingsley Moghalu said on Aug. 6. All banks in the country will be

adequately capitalized by Oct. 1, and “all the major systemic” challenges would have

been resolved by the end of the year, he told reporters in Lagos.

The central bank gave all the eight banks it bailed out up to Sept. 30 to recapitalize

or face liquidation.

“Those three banks, in the assessment of the Central Bank of Nigeria, could not

have met the deadline for recapitalization,” Moghalu said. “There was no need

prolonging the situation.”