By Ademola Alawiye with agency report

Thursday, 3 Feb 2011

The Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi, said on Wednesday that four of the nine rescued banks that failed the joint stress test carried out by the CBN and the Nigeria Deposit Insurance Corporation would sign agreements with core investors over recapitalisation this month.

Reuters, on Wednesday, quoted Sanusi as saying, “In the next four weeks, we expect four of them to sign Memoranda of Understanding with their new investors. Two of the banks are expected to conclude negotiations in the next two weeks.”

The CBN rescued nine banks in a $4bn bail-out in 2009 after auditors deemed them to be so weakly capitalised to the extent that they posed a risk to the whole financial system.

It has since sought new investors to recapitalise them and set up an asset management company to help in the process by absorbing their bad loans.

Some rescued banks had been holding talks with potential investors in recent months.

The banks are: Intercontinental Bank Plc, Oceanic Bank International Plc, Afribank Plc, Union Bank Plc, Bank PHB Plc, Finbank Plc, Spring Bank Plc, Wema Bank Plc and Equitorial Trust Bank Limited.

Meanwhile, analysts have said that some of the lenders could end up downscaling to regional banks, which have lower minimum capital requirements than national or international banks.

Equitorial Trust Bank, Spring Bank and Wema Bank had already signified intention to restructure into regional banks.

The Head of the Asset Management Corporation of Nigeria, Mr. Mustafa Chike-Obi, has said that the banking crisis will be resolved by the middle of 2011.

Chike-Obi said on Monday that AMCON was on track to absorb bad loans by the end of March and resolve the banking crisis by the end of June.

Our correspondent gathered from a source in the CBN that the rescued banks would finalise agreements immediately after the acquisition stage of AMCON.

The source, who craved anonymity, because he was not authorised to speak on the matter, said, “Arrangements have been put in place for the remaining rescued banks to finalise their recapitalisation deals as soon as AMCON acquires their non- performing loans. This may likely take place in the second quarter, immediately after the acquisition stage of AMCON.”

Source: Punch