Alliance Bank May Be Spared Liquidation By Last-Minute Foreign Cash Inflow

A last-minute infusion of foreign cash may have saved ERHC Energy chairman Sir Emeka Offor from a major embarrassment, ThisDay Online reports in Wednesday morning's editions.

According to press reports, Offor's African Express Bank - known now as AfEx Bank - was part of an eight-bank consortium seeking relicensing from the Central Bank of Nigeria after the central bank raised its threshold for licensing to require a minimum of 25 billion Naira in assets.

That meant that dozens of banks had to make consolidation arrangements before a year-end deadline. AfEx bank chose to go with Alliance Bank, a group of eight smaller banks whose combined assets apparently fell short of the threshold requirement on the Dec. 31 deadline.

A ThisDay story yesterday indicated that a total of 13 banks could be liquidated and their CEOs arrested to determine the extent, if any, of missing funds owed to depositors, but also said any of the groups might yet salvage their operations if they could demonstrate sufficient assets.

That is apparently what happened, with the Alliance Bank receiving a cash inflow from abroad in the neighborhood of $38.6 million dollars. There was no hint of where the money originated.

During the Alliance crisis, however, servers from around the world visited ERHC On The Move, some of them from law firms with substantial energy M&A business, and large banks and investment houses in Europe and North America. While the evidence for it is thin, the server traffic suggests a possible "buy-in" may be taking place, possibly as a result of the crisis.

Here are relevant excerpts from the long story by two writers from from ThisDay Online:

Failed Banks: CBN Calls for ‘Cherry Picking’
Alliance Bank in fresh N5bn maneouvres

By Samuel Famakinwa and Ayodele Aminu
01.03.2006


The Central Bank of Nigeria (CBN) has invited the 25 banks which emerged from the just concluded consolidation exercise to express interest in acquiring any of the 13 banks that failed to meet the deadline.

But the Alliance Bank Group may escape being liquidated as a ray of hope was said to have come its way as an undisclosed amount of foreign inflow from one of the merging partners was yesterday injected into its coffers. ...


Meanwhile, there were moves yesterday to rescue Alliance Bank from liquidation.

The eight banks in the Alliance Bank Group, which met yesterday to examine the next line of action, are Afex Bank, City Express Bank, Eagle Bank, Fortune Bank, Gulf Bank, Liberty Bank, Metropolitan Bank and Triumph Bank.

An official close to the group told THISDAY last night that with the foreign inflow, which is expected to be verified by the CBN today, in addition to the N5 billion already raised, the group has already achieved the N10 billion cash requested by the apex bank last week. The Group had failed to meet the conditions set by the CBN to be met last Friday.

According to information, the Group had failed to recover a certain percentage of insider-related credits totaling more than N10.5 billion as at December 31, 2005 and could not provide an organogram, which will indicate ‘who and who’ in the management. The group was also asked to raise N10 billion cash while the apex bank would accept assets for the remaining N15 billion. It was also unable to meet that.
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