N44billion still trapped in liquidated Nigerian Banks

A sum of N44 billion belonging to private depositors is still trapped in various failed banks in Nigeria.

Senator Nkechi Nwaogu, chairman, Senate committee on banking and other financial institutions, told the Senate during plenary yesterday that out of N106 billion originally trapped in the failed banks, only N62 billion has been recovered from seven out of the 14 distressed banks.

Nwaogu who presented the interim report of her committee on the agonies of depositors of failed banks, said the money recovered amounts to 58 per cent of the total trapped deposits.

Nwaogu said, “The banks whose purchase and assumption have been concluded accounted for N62 billion or 58 per cent of the private deposits of the 14 banks.”

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She added that the recovery of the funds has been slowed down by various suits filed against the Nigeria Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN) by former owners and directors of some of the banks, challenging the process adopted for their liquidation.

She said the N62 billion was recovered from the N72 billion trapped in seven of the 10 banks whose cases have been determined by the court, but added that payment to depositors has been slowed down because the liquidation orders were granted piecemeal by the court. While N10 million is pending in some of the ten banks, the remaining N34.5 billion, she said, is still trapped in four banks whose cases have yet to be determined by the court.

The ten banks from which the N62 billion has been recovered after their liquidation include All States Trust Bank, N22.3 billion; Assurance Bank, N6.2 billion; Lead Bank, N5.4 billion; Trade Bank, N7.4 billion; City Express Bank, N 7.8 billion; Hallmark Bank, N12 billion and Metropolitan Bank, N8 million.

The remaining four banks whose cases are pending include Fortune International Bank with trapped deposit of N7.5 billion; Liberty Bank, N1.7 billion; Triumph Bank, N2.7 billion and Societe Generale Bank, N22.6 billion.

Nwaogu informed the Senate that in order to protect the interest of the depositors, the CBN adopted the “purchase and assumption and the cherry picking models”, which allowed healthy banks to take over the failed banks by picking selected assets and assuming specific liabilities of the banks with the CBN making up the shortfall between the deposit liability assumed and the assets of the closed bank purchased by the healthy bank. She said this enabled the depositors to claim their money from the healthy banks that assumed their deposits. In adopting the report, the senators expressed dismay over the situation and mandated the CBN and the NDIC to intensify efforts to recover all the trapped fund as well as bring to book, any of their directors or management staff as well as those of the failed banks that may have contributed to the failure of the banks. The Senate also mandated the institutions to intensify their public enlightenment campaigns to enable the depositors to know the appropriate steps to take to recover their funds.

 

Financial Standard