Posted by By Omoh Gabriel, Business Editor, & Babajide Komolafe on
AS application deadline for pre-merger consent in the banking consolidation expired weekend, 55 of the nation's banks have coalesced into 15 distinct groups.
* 13 banks with N25bn opt to stand alone
* 5 banks seek N10bn debt relief from CBN
LAGOS - AS application deadline for pre-merger consent in the banking consolidation expired weekend, 55 of the nation's banks have coalesced into 15 distinct groups.
Also 13 banks, some of which have already met the N25 billion capital base directive are set to stand alone while 20 banks are yet to make public their consolidation plans. Five banks have also applied to the Central Bank of (CBN) for a N10 billion debt relief package with which they hope to conclude consolidation plans.
Meanwhile, preliminary report of the capital verification of the CBN indicated that Wema Bank has met the N25 billion capital base. This notwithstanding, Fountain Trust Bank have pulled out of the Wema Bank group while two other banks have applied to join.
The 15 emerging banks are: The Access Bank group (comprising Access Bank, Marina International Bank and Capital Bank International), Afribank group (comprising Afribank, Trade Bank, NNB International Bank, FSB International Bank, and Afribank International Limited), Equitorial Trust Bank group (Equatorial Trust Bank and Devcom Bank), Co-operative Bank group (Coperative Bank and Omegabank), Astra Bank group (Assurance Bank, First Atlantic Bank, Guardian Express Bank and Manny Bank), FCMB group (FCMB, Co-operative Development Bank, NUB International Bank and Societe Bancaire), First National Bank group (First Interstate Bank, Intercity Bank, Centerpoint Bank, Liberty Bank, Pacific Bank and Tropical Commercial Bank) and the First Bank group (Habbib Bank and First Bank PLC and FBN Merchant Bankers).
Others are the First Consolidation Bank group (Allstates Bank, Hallmark Bank and Lion Bank), Intercontinental Bank group (Intercontinental Bank, Equity Bank, Gateway Bank and Global Bank), NAL Bank group (NAL Bank and Indo-Nigeria Bank), UBA group (UBA, Standard Trust Bank and Continental Bank), Sterling Bank group (EIB International Bank, Magnum Bank, NBM Bank, Prudent Bank and Trust Bank), Union Bank group (Union Bank, Broad Bank, Gulf Bank, Universal Trust Bank and Union Merchant Bank) and Wema Bank group (Wema Bank, National Bank, Lead Bank and Trans International Bank).
The banks that have indicated intention to stand alone are Reliance Bank, Stanbic Bank, Standard Chartered Bank, Guaranty Trust Bank, Nigeria International Bank, Zenith International Bank, and Ecobank. Others are Oceanic International Bank, Diamond Bank, ACB International Bank, Inland Bank, IMB International Bank and IBTC.
Some of the banks are yet to indicate the direction of the consolidation plans as at Saturday. These are: Bond Bank, Chartered Bank, Citizens International Bank, City Express Bank, Eagle Bank, Fidelity Bank, Fortune International Bank, Midas Bank, Regent Bank, MBC International Bank, Metropolitan Bank, New Africa Bank, Nigerian-American Merchant Bank, Triumph Bank, Platinum Bank, International Trust Bank, African Express Bank, Bank of the North, SGBN and AIB International Bank.
Five banks want debt forgiveness
The application came on the heels of the debt relief the CBN granted eight banks whose accounts with the apex bank were over drawn and a bail out facility was put together for them by the bigger banks with the CBN as guarantor.
The banks are Assurance Bank Limited, IMB International Bank PLC, Midas Bank, Liberty Bank and Trust Bank Limited.
The banks are seeking the debt relief from the CBN based on the fact that the banks were acquired by the new owners with the belief that they will rejuvenate the banks. Investigation showed that the banks had very high profile debt that were concealed. Banking sources revealed that after the purchase of the banks involved, the new owners were made to inject new funds into them before they were allowed to take possession. According to the letter, the five banks wrote to the CBN, the new investors in these banks never envisaged that the CBN will come up with the current merger arrangement in the on-going consolidation.
The letter stated that because the consolidation was based on shareholders fund, the new capital injected into the banks by the new investors were wiped out, leaving the banks with almost negative shareholders' fund. This, they said, will count against them in negotiating with other banks. They further argued that this, if not corrected, would give a negative signal to investors. The five banks in their letter to the CBN urged the apex bank to extend the same kind gesture it gave to Bank of the North and seven others whose N72 billion indebtedness to the apex bank were written off.
It would be recalled that earlier in the month, the CBN granted the following banks debt forgiveness. They include: Bank of the North (N41billion), Africa International Bank (N7 billion), Societe Generale Bank (N13 billion), Fortune Bank (N2 billion), City Express (N2.5 billion) and Afex Bank (N5 billion).
These banks, they argued, were indebted to the apex bank and a bail out was put together for them prior to the announcement of the consolidation. Some of the banks which got the facilities had a CBN withholding action on them in which they would not undertake any new lending, branch expansion, advertising, etc. As a result of their debt position, the banks were not attractive to other banks, making the CBN to assist them by granting debt forgiveness. The five banks are asking for the extension of the same gesture.
For instance, investigation showed that Liberty Bank got a life line of N1.2 billion from the United Bank for Africa (UBA) guaranteed by the CBN. The five banks have a staff strength of 2,000.
Wema Bank makes N25bn capital base
Meanwhile, Wema Bank has joined the elite group of banks that have met the N25 billion minimum capital base. This followed the success of the public offer issued by the bank in last quarter of 2004.
Fielding questions from financial journalists last week, Managing Director/Chief Executive of the bank, Alhaji Alade Adeleke, said preliminary report conducted by the CBN on the proceeds from the offer sent to the bank indicated that the bank had surpassed the N25 billion minimum capital base mark. Prior to the offer, Wema Bank had a shareholders' fund of N8 billion. The public offer was aimed at raising N17.5 billion. Adeleke said the bank was able to raise more than N18 billion but the preliminary report of the CBN capital verification indicated about N17 billion. 'We are, however, confident that more of the applications would be approved by the CBN," he said.
His words: 'The attainment of the minimum requirement was even before reflecting the result of the bank's 2004/2005 financial year which ended in March 2005. This heartwarming development comes not just as a resounding re-assurance to our numerous customers on the capability of Wema Bank to meet their modern banking needs but also as a big boost to the consolidation plan of the Wema Group.
'However, it is pertinent to acquaint members of the public with recent development in the Wema Group, the major ones being the withdrawal of Fountain Trust Bank from the group and the provisional admission of two new banks. The consolidation of the group remains on course and is even being fast-tracked. It is still open to banks with good prospects for synergy in core competencies and geographic spread of branch network.
'Finally, we would like to reiterate Wema Bank's commitment to utilise the proceeds of the offer for the purposes stated in the offer prospectus namely, improving the bank's IT capability to deliver efficient banking services at competitive prices, expansion and modernisation of the branch network and service delivery channels as well as increasing our working capital," he said.