Afribank, Bank PHB,Spring Bank FG takes over

 

The Federal Government  through the Nigeria Deposit Insurance Corporation  assumed ownership of Afribank, Bank PHB and Spring Bank  via  the “Bridge Bank” mechanism following the revocation of their licences by the CBN
This means the three banks will still be open to customers and continue to operate normally under
the control of three bridge banks created by the  Nigeria Deposit Insurance Corporation   to assume their assets.
The Bridge Banks are Enterprise Bank Limited to assume assets of Spring Bank, Keystone Bank Limited to assume assets of Bank PHB, and MainStreet Bank Limited to assume assets of  Afribank.
A bridge bank is a temporary bank organized by the regulators to administer the deposits  and liabilities of a failed bank . Bridge banks must be chartered  as national banks . To the extent possible, bridge banks are required to honour the commitments of the failed bank to its customers, and not to interrupt or terminate adequately secured  loans . Bridge banks are authorized to seek to liquidate failed banks, either by finding buyers for the bank as a going concern, or by liquidating its portfolio  of assets, within two years, which can be extended for cause by an additional year.
Managing Director/Chief Executive, Nigeria Deposit Insurance Corporation,(NDIC) Alhaji Umar Ibrahim, who disclosed this at a press briefing in Lagos,said the CBN has granted banking licences to the three bridge banks  and have guaranteed their  inter-bank obligations until on December 31, 2011 to ensure continued operations and customer confidence. He said that each bank will now answer the names of their respective bridge bank while  their management and staff are now contractually employees of the bridge banks. He said the law allows the Corporation to operate the bridge banks up to 3 years.
Afribank, Bank PHB and Spring Bank were among the 10 banks bailed out by the CBN in 2009 with injection of N620 billion tier two capital.
Ibrahim noted that while two of the banks namely Wema Bank and Unity Bank had successfully recapitalised, four banks namely Union Bank, Intercontinental Bank, Finbank and Oceanic Bank have signed legally binding Transaction Implementation Agreement (TIA), a significant step towards recapitalisation by the deadline of September 30th  set  up by the CBN. Equitorial Trust Bank Limited is currently in the final stage of negotiation with a prospective  investor with strong likelihood that it will meet the recapitalisation deadline.
However, the remaining three banks (Afribank, Bank PHB and Spring Bank) have not shown necessary capacity and ability to recapitalise within the September 30th deadline.
“Accordingly, in the interest of depositors and to prevent liquidation which will have dire consequences for depositors and undermine public confidence in the banking system, pursuant to the provisions of the NDIC Act, the Corporation, after due consultation with the CBN and the Federal Ministry of Finance and with full support of the Federal Government, has resolved the problems of the three banks through the Bridge Bank mechanism.
To this effect, the assets and liabilities of the affected banks, whose licences have now being revoked by the CBN, have been duly transferred by the Corporation to newly incorporated Bridge Banks as follows: “Main Street Bank Limited has assumed the assets and liabilities of Afribank Nigeria PLC; Keystone Bank Limited has assumed the assets and liabilities of Bank PHB PLC; Enterprise Bank Limited has assumed the assest and liabilities of Spring Bank PLC.