NDIC, CBN set to liquidate failed community banks

Akin Adewakun and Odidison Omankhanlen, Lagos - 04.02.2008

The Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) may, any time from now, commence the full winding up of community banks that failed to meet the December 31, 2007 recapitalisation deadline set by the CBN.

Confirming this development to the Nigerian Tribune, the CBN’s Head of Corporate Affairs, Mr. Festus Odoko, said every arrangement had been put in place to commence the liquidation process, adding that the apex bank would not go back on its decision to close down community banks that failed to meet the recapitalisation deadline.

He warned members of the public to be wary of the failed banks, while enjoining them not to have anything to do with them since their licences had already been revoked.

Nigerian Tribune investigations revealed that the CBN had been meeting with the top echelon of the affected banks to inform them of the bank’s next line of action.

“The apex bank is really determined to ensure a hitch-free winding up process, which would be in line with the Banks and Other Financial Institutions Act (BOFIA) 1991,” the source said.

A competent source in the NDIC, who also confirmed the development to the Nigerian Tribune, said the various depositors in the failed community banks would soon smile.

He said the corporation was actually waiting for the CBN to complete its own side of the exercise before it would commence the liquidation process.

The source explained that the process was for the CBN to revoke the licences of the affected banks and direct the NDIC to commence winding up process. The procedure requires the NDIC to first apply to a federal court for provisional and final order of the court to commence liquidation.