by Udeme Ekwere
Zenith Bank Plc has announced that it will sell its non-banking subsidiaries.
The bank said in a conference call with Bloomberg on Thursday, that it had applied to the Central Bank of Nigeria for an international commercial banking licence.
Its Chief Executive Officer, Mr. Godwin Emefiele, said that the bank would, however, keep its banking units located in Sierra Leone, Ghana and Gambia.
In its audited results released to the Nigerian Stock Exchange this week, Zenith Bank recorded a profit after tax of N37.41bn for the year ended December 2010.
This represents an increase of 82 per cent or N16.81bn compared with N20.06bn recorded in 2009. Its turnover, however, fell by 31 per cent or N84.81bn to N192.48bn, down from N277.30bn the preceding year.
The bank’s Board of Directors proposed a dividend of 85 kobo per share to its shareholders, while its share price had gained 4.9 per cent or 73 kobo to close at N15.43 per share following the announcement of its results.
The CBN had, last year, drawn the curtains on universal banking in the country, in compliance with the statutory provisions of the Banks and Other Financial Institutions Act.
The apex banking regulator had said that the action would make commercial banks to be clear on their activities, while defining their businesses along commercial, merchant or specialised banking lines.
The CBN released the rules and regulation governing the implementation of the modified universal banking model.
Its recent guidelines required that the existing banks should submit compliant plans within 90 days that would facilitate their easy transition from the universal banking field to the new order, which would make them operate either as commercial banks, merchant banks or specialised banks.
The CBN in its regulation on the scope of banking activities and ancillary matters said as part of its objective to promote a sound financial system in Nigeria, it had determined that the universal banking model and the resultant expansion of banks into a broad range of financial services, had exposed the banks to higher operating risks, increased the propensity to put depositors’ funds into risky non-banking business, and consequently heightened the risk of financial system instability.
The apex bank regulator indicated its plan to thoroughly review the compliance plan when submitted by the banks with a view to determining its fairness.
It added that where the compliance was found to be fair, approval-in principle would be granted to the bank that met the requirements to enable it to commence the operational restructuring of its full transition.
The apex bank said that where a plan submitted by a bank was found unsatisfactory, it would issue a deficiency letter by listing the inadequacies observed in the plan and expect the affected bank to submit a revised compliance letter.
Source: Punch
