Addressing journalists in Lagos on Friday, the managing director of the Nigeria Deposit Insurance Corporation (NDIC), Umaru Ibrahim, said the assets and liabilities of the three affected banks had been transferred to Bridge Banks, effective August 5, 2011.
The Bridge Banks are MainStreet Bank Limited, Keystone Bank Limited, and Enterprise Bank Limited.
Under the new arrangement, MainStreet Bank Limited takes over the assets and liabilities of Afribank; Keystone Bank Limited assumes the assets and liabilities of Bank PHB, while Enterprise Bank Limited takes over that of Spring Bank.
The three banks are among the eight institutions rescued by the CBN in 2009 by sacking the management and injecting capital to keep them afloat.
The others, Union Bank, Oceanic Bank, Intercontinental Bank, and Finbank have made significant progress in their recapitalisation plans, having signed Transaction Implementation Agreement(TIA) with new strategic partners.
Mr Ibrahim explained that the Bridge Banks are being run by the NDIC as growing concern, adding that the managements of the affected banks appointed by the CBN in 2009 have ceased to be working for the apex bank and the respective banks.
He added that the corporation invoked the provision of the Bridge Bank option in law to resolve the problem in the banking sector, stating that the option was a veritable tool to enhancing depositors' protection.
"This move became necessary to restore the confidence of the stakeholders in the banking industry. The banks would still be run as a going concern by the NDIC through the Bridge Banks mechanism. Meanwhile, the CBN appointed management cease to be employers of CBN but are now under the NDIC," he said.
Mr Ibrahim said the choice of the Bridge Bank option was arrived at in order to avoid liquidation, which would have had dire consequences for depositors and undermine public confidence in the banking system. He said despite the change in nomenclature, depositors would still have access to their deposits and could transact business as usual.
He added that this will promote confidence by ensuring seamless continuity of banking operations. The NDIC boss further said that the corporation will keep operating the Bridge Banks until such a time it would engage the Asset Management Corporation of Nigeria (AMCON).
Meanwhile, the CBN has given a tacit approval to the action taken by the CBN, stressing that the action would ensure that public confidence in the banking sector is not eroded and that depositors' funds are safe.
A statement issued by the apex bank tagged ‘Resolution of Recapitalisation through Bridge Banks' stated that, "The CBN is aware of, and supports the decision of NDIC, to exercise its statutory powers under the NDIC Act."
It assured that it would grant all waivers, forbearances and exemptions necessary for their operations. Consequently, it has extended the interbank guarantee of the three banks to December 31.
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