By Elizabeth ADENUGA
Capital market operators on Thursday urged Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) to map out strategies to manage ailing banks rather than outright liquidation.
TBI Africa said they stated this in separate interviews with the News Agency of Nigeria (NAN) in Lagos while reacting to the liquidation of Fortis Microfinance Bank Plc.
The operators said that CBN and NDIC should rather manage the affairs of any distressed financial outfit instead of resorting to liquidation in the interest of depositors, shareholders and the economy in general.
NAN reports that NDIC recently announced the official liquidation of Fortis Microfinance Bank and its branches nationwide.
The corporation, in a statement posted on its official website, assured insured depositors of the repayment of their monies.
The statement reads: “NDIC, the official Liquidator of Fortis Microfinance Bank whose license was recently revoked, has concluded arrangement to close the bank and its branches and pay the insured depositors.
“We are therefore calling all depositors of the bank to visit the bank’s branches and meet NDIC officials for the verification of their claims, commencing from Feb. 4 till Feb. 8, 2019,” said the statement.
Malam Garba Kurfi, Managing Director, APT Securities and Funds, said that operators expected the apex bank and NDIC to manage the affairs of Fortis Microfinance instead of liquidation.
Kurfi said that management of the bank’s affairs would have been better for the depositors and existing banks that had business relationship with Fortis.
“We will expect the CBN and NDIC will rather manage the affairs of the bank before liquidation as that could have been better for the depositor.
“Liquidation will affect the existing banks that have business relationship with Fortis Microfinance Bank which can extend to other banks,” he said.
Kurfi said that appointing a new management and resale of the bank would have been better for entire economy rather than liquidation.
He, however, commended the Nigerian Stock Exchange (NSE) for being proactive in suspending the bank from trading in November due to non compliance with post listing requirements.
Mr Boniface Okezie, National Coordinator, Progressive Shareholders Association of Nigeria (PSAN), said that shareholders remained the victims without any compensation.
Okezie said that regulators must device other means of solving the problems in the financial industry instead of aggravating it through liquidation.
He said that regulators should take over the bank through bail out by appointing a new management to oversee its affairs instead of resorting to liquidation.
“Our regulators must device other means of solving the problems in the financial industry rather than aggravating it, most especially microfinance banks,” Okezie said.
He said that microfinance banks must be adequately protected at all times by NDIC and CBN, noting that not much had been done.
Mr Moses Igbrude, Publicity Secretary, Independent Shareholders Association of Nigeria (ISAN), said that it was unfortunate that shareholders were subjected to suffering without due compensation.
Igbrude said that uncertainties and loses in the banking sector in the past few years was immeasurable.
He said that shareholders would wake up and find out that their investments had gone down the drain.
“The anxiety and the question in mind of shareholders now is, which bank is next to go down?”, he said.
He said “nobody knows which bank is stronger and that is what Fortis Microfinance Bank has shown.”
Igbrude called on the shareholders to be cautious and careful when investing in banks stocks to avoid burning their fingers.
He said that government and regulators should bear in mind the effect and reputational risk sudden take over of distressed banks was having on the stock market and the economy.
NAN reports that Fortis Microfinance Bank was licensed by CBN in 2007 and listed on NSE as the first private sector led Microfinance Bank in 2012.
The shares was suspended from trading on the floor of the NSE for failing to adhere to standard corporate governance and extant post-listing requirements that made it mandatory for quoted companies to submit their financial statements within stipulated timelines.
It had also been grappling with protracted governance crisis and internal breakdown of management controls which ultimately led to the resignation of its interim Managing Director, Mrs Bunmi Lawson; now the eventual collapse of the bank.
In 2017, the bank’s nine months interim results showed that with a customer deposit of about N7.9 billion, it only had less than 10 per cent of its total deposit which amounted to N440 million in its bank accounts.
