Depositors' money worth at least N16.33bn went down the drain last January, when the Central Bank of Nigeria withdrew the operating licences of 26 commercial and merchant banks. Of the 26 banks, 13 were commercial (retail) banks while the other 13 were merchant (wholesale) banks. The liquidated commercial banks are Allied Bank, Amicable Bank of Nigeria, Cooperative and Commerce Bank, Commercial Trust Bank, Commerce Bank Ltd., Credite Bank, Highland Bank, Lobi Bank, Mercantile Bank of Nigeria, North-South Bank, Pan-African Bank, Pinnacle Commercial Bank and Progress Bank.
The merchant banks are Abacus Merchant Bank, ABC Merchant Bank, Century Merchant Bank, Continental Merchant Bank, Crown Merchant Bank, Great Merchant Bank, Group Merchant Bank, ICON Ltd., Merchant Bank of Africa, Nigeria Merchant Bank, Prime Merchant Bank, Royal Merchant Bank and Victory Merchant Bank. The exercise brings to 29 the total number of Nigerian banks so far liquidated.
The revocation of their licences was contained in official gazette No. 4, Vol 85, dated 16 January 1998, which empowered the Central Bank governor, Mr Paul Ogwuma, to liquidate the banks. Addressing the press on the liquidation, Mr Ogwuma said that it will cost the Nigeria Deposit Insurance Corporation (NDIC), the banks, undertakers, about Nl20m to carry out the exercise.
The 26 distressed banks had a total deposit liability of N16.33bn out of which only N5.99bn will be paid out by the NDIC as the insured liability of the 26 banks. This means that depositors will lose N10.3bn. Under the law, small depositors will be paid in full while the big depositors will be paid a maximum of N500,000 each irrespective of the amount each had in the bank. The loans and advances made by the banks stood at 1126.686bn.
The CBN governor warned all those indebted to the affected banks to pay up their debts or face prosecution at the failed banks (recovery of debts) and financial malpractices tribunal.
Since 1994, when the government took a serious view of distress in the banking industry, hundreds of directors, managers, and debtors of failed banks have been languishing in detention. Only a fraction have...