By Okechukwu Nnodim and Akinwale Aboluwade

As reactions over the recent nationalisation of three Deposit Money Banks by the Central Bank of Nigeria continue, professionals in Nigeria’s financial system have said the apex bank may be withholding salient facts as to why it revoked the licences of the DMBs.

The analysts, who spoke with our correspondent on Friday in separate interviews, noted that the CBN’s reason for withdrawing the licences of the three banks was not justifiable, and called on the regulatory body to come up with better explanations in order to calm strained nerves.

“There is a huge question mark about the timing of the intervention,” the Chief Executive Officer Designate, MBC Securities Limited, Mr. Toyin Ayoade, said.

The CBN on August 5, when it terminated the licences of the banks, explained that it took the decisive step because the management and shareholders of the three banks did not show the necessary capacity and ability to recapitalise within the given September 30 deadline.

The DMBs sold to the Asset Management Corporation of Nigeria at the time were Afribank; Bank PHB ;and Spring Bank, and their assets and liabilities were transferred to Mainstreet Bank, Keystone Bank, and Enterprise Bank respectively, which formed the constituted “bridge banks.”

According to Ayoade, the DMBs had about two months before the deadline to perfect the recapitalisation processes, stressing that rather than revoking the licences of the affected banks, the apex bank should have strengthened them financially.

He said, “I really don’t see why the CBN and AMCON should rush to the conclusion of nationalising these banks. The banks should have been given some leverage. And if you take a critical look at this whole issue, you will find out that these banks had 55 more days to the deadline, but their licences were still withdrawn.

“The rush by the CBN remains suspicious until they come up with better clarification, and that is if they actually have any.”

A chartered banker and Banking Law expert, Mr. Bode Ayorinde, described as illegal the decision taken by the apex bank.

He said, “It was wrong for CBN to have hurriedly established the bridge banks to acquire the assets of the three banks. The position of law is that in the event that a bank’s licence is revoked, the Nigeria Deposit Insurance Corporation should take over the assets and liabilities of the affected bank.”

“What is strange to the law is the issue of bridge banks put in place by the CBN. Under normal circumstances, the NDIC naturally becomes the undertaker and is in position to pay the banks’ depositors and liquidate the banks.”

“Since the law does not permit the apex bank to establish any bank, the establishment of the bridge banks is unlawful and not in existence.”

Source: Punch