CBN Endorses Bridge Banks

cbnThe Central Bank of Nigeria (CBN) has endorsed the decision of the Nigeria Deposit Insurance Corporation (NDIC), to exercise its statutory powers under the Nigerian Insurance Deposit Corporation Act, to establish Enterprise Bank Limited, Keystone Bank Limited, and Mainstreet Bank Limited as Bridge Banks, and by Purchase and Assumption Agreements, cause all the deposit liabilities and certain other liabilities and the assets of Spring Bank Plc, Bank PHB Plc, and Afribank Nigeria, respectively to be assumed by the 3 Bridge Banks, effective 5th August 2011.

The NDIC, in its role as insurer of deposits and in pursuance of express statutory powers, acted to ensure that public confidence in the nation’s banking system is not eroded and that depositors’ funds are safe.

The CBN, as the principal promoter of a sound financial system in Nigeria, and as required under the NDIC Act, has issued banking licenses to the Bridge Banks.

Accordingly, the CBN has assured the public that the depositors of the Bridge Banks are assured of the safety of all their deposits. The CBN also assures seamless business continuity and ability of the Bridge Banks to meet obligations to depositors and lender-creditors as they arise, by granting all waivers, forbearances and exemptions necessary for their operations.

Already the CBN has guaranteed the inter-bank obligations of the Bridge Banks until December 31, 2011 to ensure continued operations and customer confidence.

Meanwhile in another development following the successful signing of Transactions Implementation Agreement (TIA) between Ecobank Trans-national Inc (ETI) and Oceanic Bank Plc, the CBN has announced its extension of interbank guarantee given to Oceanic Bank to 31st December 2011.  The extension is on the same conditions as stated in the CBN circular dated 13th July, 2009 titled “Guarantee for Interbank Placements and Placements with banks by Pension Fund Administrators”.
It will be recalled that the same approval was granted to Union Bank Plc, Intercontinental Bank and Finbank Plc after signing their individual TIAs with investors and merger and acquisition partners last month.

The signing of the legally binding TIAs for these four (4) banks has resolved the recapitalization of close to 75% of the combined negative asset value of the eight CBN intervened banks.
The recapitalization of all the eight banks is on course to be completed before the 30 September, 2011.

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