Sanusi Lamido Sanusi, CBN Governor

Festus Akanbi

Three months after the expiration of the May 14 deadline given to banks to make up their minds about their subsidiaries operated under the universal banking regime, there are indications that the Central Bank of Nigeria (CBN) has come under intense pressure from a number of operators seeking an extension of the deadline.

THISDAY’s checks at the weekend, however, showed that the apex bank is ruling out a blanket extension for all the banks, insisting that defaulters of the policy on subsidiaries will pay penalties for missing the deadline.

The CBN had directed banks to transit from the universal banking space to the new system which specifies that they become commercial banks, merchant banks or specialised banks. The regulation, dated October 4, 2010 and released to banks on November 1, 2010 compels banks currently operating under a universal banking licence to submit for approval a compliant plan approved by their shareholders at a duly convened general meeting in the space of 90 days, as it were.

However, it was learnt that quite a number of banks, especially the three bridged banks-Mainstreet Bank Plc, Keystone Bank Plc and Enterprise Bank Plc- may have applied for extension of the deadline as a result of the peculiarities of their structures. Although some of them have taken a definite position, insider sources said they still need time to fully settle the issue of their subsidiaries.

Managing Director, Keystone Bank, Mr. Oti Ikomi, who confirmed the development in a recent interview with THISDAY, said the peculiarity of his organisation as a bridged bank compelled it to apply for an extension.

He said: “We are running a commercial banking licence; we are not using the Holding Company (HoldCo) structure. We are actually divesting all of our domestic subsidiaries because the CBN mandated that by May 14, 2012, banks should have divested from their domestic subsidiaries.

“But because of our peculiar circumstance, there are some sale processes that are ongoing. We believe that by the end of the year, which we applied for extension, we should have been able to conclude or accelerate most of the divestments”.

Listing steps taken so far, he said, “In particular, we divested our first entity last week Friday (August 3). That was Capital and Trust Limited. It is a small registrar firm and we divested it to a company called Apel Asset Management Limited with the full approval of the board.

So our insurance, healthcare and other subsidiaries will, in due course, also go through divestment. So we are going for a commercial banking licence but we also recognise that we have international branches. Keystone Bank is presently in five countries. Apart from Nigeria, we are in Uganda where we own 80 per cent of Orient Bank which has very strong business; we are in Liberia, Gambia and Sierra Leone. So we will be operating as a commercial bank with international representation.”

But a CBN official, who did not want to be quoted, acknowledged the fact that the apex bank is being inundated with applications for extension of deadline on the operation of subsidiaries explaining however that it has been resolved that there won’t be a blanket treatment for all the cases.

He said some of the banks would soon be penalised for missing the deadline, adding that all the applications would be treated case by case.

The source confirmed that the CBN is giving the three bridged banks some concession because of their peculiarity.
The CBN, in its current law, orders banks that maintain related enterprises other than what is permitted under the new banking structure to take steps to divest their interest completely before May 13, 2012.

The provision is that after deadline, any bank that fails to deliver its existing universal banking license to the CBN will cease to carry on banking business in the country.

This policy clearly asks banks to divest from non-core banking service – insurance, pension funds management, brokerage firms, mortgages banks and other interest. But any bank which intends to keep such interests must evolve a holding company that will hold all of the companies including the bank.