| UBA has acquired 5
failed banks, 38,500 accounts and N7.9b private deposits
–– NDIC MD
By SEUN ADESIDA
Saturday, March
29, 2008
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Photo: Sun
News Publishing |
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When the consolidation gale blew through the banking sector
few years ago, some banks fell by the ay side. Their assets
and lability and the management now reverted to the Nigeria
Deposit Insurance Corporation (NDIC) But the head of NDIC
has affirmed that many of those affected banks have been taken
over. But most interesting in the acquisition game is that
UBA, among all the banks has singlehandedly taken over five
of the stranded banks.
UBA stands tall
NDIC boss, Mr. Ganiyu Ogunleye, revealed that: “Recently
we handed over Gulf Bank and Eagle Bank both (in liquidation)
to UBA and Zenith Banks respectively under the Purchase and
Assumption transactions. This brings the number of banks whose
private deposit liabilities have been resolved through the
P&A transaction to ten banks.
P&A is a resolution transaction in which a healthy bank
acquires some or all the assets of a failed bank and assumes
some or all the liabilities, including all insured deposits.
With the acquisition of Gulf Bank, the number of failed banks
acquired, so far, by UBA has come to five. UBA had earlier
acquired Trade Bank Plc, Metropolitan Bank Plc, City Express
Bank and African Express Bank. By acquiring Gulf Bank, UBA
has assumed N7.9bn private sector deposit liabilities, made
up of 38,500 accounts.
Zenith sets acquisition pace
While Eagle Bank was the first bank to be acquired by Zenith
Bank, the fact that the bank acquired the total deposit liabilities
of the failed bank made the transaction a unique one. This
means that all depositors, both private and public, will have
full recovery of their deposits at the same time.
The acquisition by Zenith would not involve in issuance of
promissory notes by the Central Bank of Nigeria since there
was no funding gap. It also acquired the outstanding loans
of the defunct bank. Debtors of Eagle Bank should honour their
obligations and seize the opportunity to continue banking
relationship with the bank for mutual benefit.
The value of the assets, which Zenith acquired was adequate
to cover deposit liabilities, both private and public, the
deposit liabilities as at the time Eagle Bank went into liquidation
was about N890m.
Liquidated suits
NDIC had been appointed liquidator of 12 out of the 14 banks,
whose licenses were revoked in January 2006. The law suits
filed by the shareholders and directors of two out of the
14 banks - Fortune Bank and Societe Generale Bank –
were still pending before the courts. Therefore, we cannot
resolve the private deposit liabilities of the two banks until
the cases in court are determined,” he said.
P&A transaction
Through P&A transaction, the private deposit liabilities
of 10 failed banks, amounting to N72.5bn, had so far been
resolved. This accounted for 86 per cent of the N84.5bn private
deposit liabilities of 13 out of the 14 banks. At the moment,
we do not have reliable information on the deposit liability
of Societe Generale Bank.
Payments to depositors of four banks – Savannah Bank,
Peak Merchant Bank, Societe Generale Bank and Fortune Bank
– cannot be effected until the lawsuits pending before
the courts are determined.
Banks should be customer-focused and appreciate that in a
competitive environment consumer is king. No customer should
be too small and treated shabbily, all customers be retail
or corporate should be entitled to efficient and courteous
service.
Consolidation induced growth
The financial sector has grown rapidly since consolidation.
Indicators such as balance sheet footing, asset base, deposit
liability, profit after tax and stock market capitalization
have witnessed exponential growth.
Consolidation has also induced keen competition in the financial
services industry which has manifested in massive advertising
by banks of new products, branch network, asset base, capital
base, promises of returns and services.
While the banks are increasing on all other issues but services,
bank consolidation which involved mergers and acquisitions
has compelled greater focus on just branding by virtually
all the 25 banks.
Empty branding
In many cases, branding resulted in change of logo, or colour
code. Greater preference appears to have been given to red
and orange colour code. Based on our recent experience, one
is compelled to ask if a brand is a combination of attributes,
both tangible and intangible that serve to distinguish one
product, company, service, organisation or person from another,
but in the real sense of it a brand implies trust and a set
of expectations.
A brand involves certain feelings in people’s mind for
example, innovation, care or efficiency. We should know that
while products are made in a factory, brands are made in the
mind. In this regard, what feelings do banks’ brands
invoke in stakeholders? If your bank’s brand does not
invoke any feeling, I suggest to you take another look at
your banks branding.
The banks need to work extensively on brand management, reputation
management and consumer education of financial literacy outreach.
For image making initiatives to be effective, banks should
have a clear understanding of stakeholders’ expectations.
Bank services
In response to competition various promises have been made
by our banks to their customers which they cannot boldly assert
they have delivered on, and that entails a reputation risk.
For example, bank cheques should be handled within five minutes,
and we don’t know what infrastructure they have put
in place to ensure that that promise is kept or to monitor
service delivery across its branches? How many of our banks
use Mystery Shoppers to monitor the efficiency of their service
delivery or have effective complaints desks to expeditiously
address customers concerns and complaints?
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