Capital requirements delay SGBN, Savannah Banks’ reopening

Still smarting from capitalization issues, Societe Generale Bank of Nigeria (SGBN) and Savannah Bank of Nigeria are yet to open shops because of their inability to meet the credit terms of the Central Bank of Nigeria (CBN). The Nigeria Deposit Insurance Corporation (NDIC), in collaboration with the CBN, in 2011, set up a Joint Committee to work with the SGBN team so as to facilitate commencement of operations of the bank, but till date, the banks are yet to commence full banking operations despite promises of commencement in December 2012.

Sources from the two banks said they have taken the option of accessing credit facility from the apex regulator. Ugochukwu Okoroafor, CBN spokesman confirmed in an earlier report that the duo would only be granted credits ‘‘if they meet stipulated terms of the loans.’’ He said they have shown greater capacity to come back and expressed the regulator’s willingness to work with them and facilitate their return to business. “We will encourage the banks to return to business even if it entails granting them credit lines provided they meet specified terms,” he said. Director, insurance and surveillance department of the Nigeria Deposit Insurance Corporation (NDIC) Zaccheaous Anete had earlier assured depositors of defunct Societe Generale Bank of Nigeria (SGBN) Limited that their monies would be accounted for as the bank begins operation soon.

He said SGBN has obtained a regional banking licence and will soon conduct second round of deposit verification; adding that in the last bankers committee meeting of 2012, the new managing director of the bank was in attendance. “The good news is that all depositors’ funds will be accounted for. They will have access to their deposits,” Anete said. Mrs Tokunbo Martins, CBN director of Banking Supervision, was also reported to have confirmed that the ailing institutions could get about N20 billion each in credit from the apex bank to enable them to meet the statutory requirements. The CBN had restored the operating licences of the two banks after they won their protracted legal battles against the apex bank. While the operational licence of Savannah Bank was withdrawn in 2002 and later restored in 2009, SGBN’s was withdrawn in 2005 and returned in 2008.

Both lenders were shut over poor liquidity challenges. The banks are expected to furnish the apex bank with the names of their managing directors for screening, before the final approval is given for their take-off. Umaru Ibrahim, managing director, Nigeria Deposit Insurance Corporation (NDIC), said for Savannah Bank to resume operation, finding a new investor is important. According to him, the delay in its returning had to do with lack of capital. 

Ibrahim said it would take some time for the two banks to put their houses in order, noting that when they were shut, some of their branches were vandalised and their staff have also left. “For the banks to come back is not easy task, it will take quite some time for them to put themselves together as all their employees have left, they do not have access to some of their branches , they cannot access their records in those branches,” he saidat a forum last year.

Their return is also subject to the CBN banking guidelines released in 2010 that categorised banks into regional, national and international banks with varying capital bases. The guideline stipulates that the minimum paid-up capital for a regional banking licence is N10 billion, while a national bank must have N25 billion and international N100 billion. The licences of SGBN and Savannah Bank were were restored in 2010 through court judgments. While some stakeholders argued that the banks would not meet the pace of the banking climate, others expressed optimism that if the right steps are taken, the banks may look attractive once more.

While the management of SGBN opted for the regional banking category, Savannah Bank is yet to decide. The CBN had restored the operating licences of the duo after they separately won their legal battles against the apex bank on reclaiming their licences. The NDIC has conducted due diligence on the banks and have handed them over to their promoters. For the SGBN, International Energy Insurance Plc (IEI), which won the bid for the acquisition of the bank,that floated a private placement has raised bulk of the funds needed for its return.