Offor's Bank Declared Insolvent; Board Dissolved, New Management Appointed

African Express Bank, the littke-known financial instutution owned by Sir Emeka Offor, has been declared insolvent along with 10 other Nigerian banks, and the country's Central Bank has dissolved its Board of Directors and replaced it with new management.

This appears to be the end of the line for the bank, whose role in the empire created by the Nigerian billionaire is not well understood by U.S. investors.

The bank's troubles became caught up in the central bank's grand consolidation scheme, in which 85 banks were merged into 25 that each had assets of more than $25 billion. All had difficulty meeting the Dec. 31 deadline, and 13 failed to do so.

A group of eight banks consolidated as Alliance Bank and raised a large portion of the meeded assets but didn't cross the $25 billion Naira mark before Dec. 31, 2005, a deadline that - unlike many in Nigeria - was strictly enforced.

Here is the story from tomorrow's ThisDay Online:

CBN Dissolves Boards of 11 Banks
By Ayodele Aminu in Lagos and Kunle Aderinokun
in Abuja, 01.16.2006

The Governor of the Central Bank of Nigeria (CBN), Prof. Charles Soludo will tomorrow lead the Managing Directors and Chief Executive Officers of the 25 banks which emerged from the just concluded consolidation exercise to a meeting with President Olusegun Obasanjo to discuss “emerging economic issues” in the country.

The apex bank has also dissolved the board of directors of 11 banks that have been declared insolvent with negative shareholders’ funds and appointed interim management committees (IMCs) for them.

All invitees to the meeting with the President which holds at the Presidential Villa in Abuja at 2pm, are expected to attend in person as they are not allowed to send proxies.

An invitation letter to this effect signed on behalf of the CBN Director of Banking Supervision by one Mr. A. Mohammad and dated January 4, 2006 states: “You are please invited to a meeting with Mr. President/Commander in Chief of the Armed Forces of the Federal Republic of Nigeria, His Excellency, Chief Olusegun Obasanjo to discuss some emerging issues” on Tuesday, January 17, 2006.

The letter, titled “Invitation to a meeting with Mr. President”, advised all the Managing Directors of all the 25 banks in the country to “assemble at the CBN Governor’s conference room Wing B, 11th floor, CBN Headquarters, Abuja at 1pm prompt for the group’s movement to the Presidential Villa”, advising that they “attend the meeting in person.”

The last time President Obasanjo summoned bank CEO’s to a meeting was January 20, 2004 when it invited the Bankers’ Committee to Abuja where he unveiled the role banks were expected to play in his administration’s new reform programmes.

The President had also met with bank chiefs on February 25, 2002 when he summoned CEOs of oil companies, insurance companies and banks to Aso Rock and deliberated on how the industry chieftains could help the government in financing infrastructural facilities in Nigerian universities.

The deliberation appeared to have yielded some fruit as the CBN, the Nigerian Deposit Insurance Corporation (NDIC) and a few banks have already taken up projects in some universities.

It would be recalled that the first meeting Obasanjo had with bank chiefs was April 30, 2002 at the 260th meeting of the Bankers' Committee where he made history by being the first Nigerian President to attend and address the Bankers' Committee meeting. He specifically registered his displeasure over the then regime of inflationary lending rates.

Meanwhile, the CBN has dissolved the board of directors of 11 banks that have been declared insolvent with negative shareholders’ funds and appointed interim management committees (IMCs) for them.

The affected banks were those that failed to cross the N25 billion minimum capitalisation threshold and have been penciled down for liquidation. They included African Express Bank; Eagle Bank; Fortune Bank; Gulf Bank; Hallmark Bank; Lead Bank; Liberty Bank; Metropolitan Bank; Societe Generale Bank; Trade Bank and Triumph Bank
CBN’s Head, Corporate Affairs, Mr. Festus Odoko who disclosed this yesterday in Abuja said the directors of the 11 deposit money banks were removed because the apex bank has found them to be in “grave situation having become insolvent with negative shareholders” funds and having failed to comply with the obligations imposed upon them by the Banks and Other Financial Institutions Act 1991 and the Central Bank of Nigeria Act 1991, as amended”.

He stated that “the appointment of the interim committee is pursuant to the powers conferred on the CBN by the Banks and Other Financial Institutions Act 1991 and the CBN Act 1991 as amended.”

He said the committees are expected to “determine the overall condition of the banks; ascertain the level of the assets-stripping, if any; and to advise the regulatory authorities of specific ways to satisfy the key stakeholders of the banks and any other actions necessary to achieve the above.”

Those appointed to serve on the IMCs, according to him, are: African Express Bank-Ismaila Shuaibu and Mrs Ayotunde Asobo; Eagle Bank- Omowa Gbadebo, Augustine Charles and Ambah Offiong; Fortune Bank -Innocent Ilozumba and Dr Joe Emeson; Gulf Bank- Omoruyi Iyamu and S. Oluwole Afelumo; Hallmark Bank- Cyril Chukwuma and Alhaji Saidu Ali Danyabo; Lead Bank- Gbolahan O. Folayan and Ozoji Chidinma Janet; Liberty Bank- O.O. Sodiya and Ezegbu Basil O.; Metropolitan Bank - Dolapo Atekoja and Bature Mohammed Abubakar; Societe Generale - Dr S. A. Ndanusa and B.A. Sanda; Trade Bank - Saidu Baba Ahmed and H.I Muhammed; Triumph Bank - Ms Benedickter C. Molokwu and Ibrahim Aminu.