MainStreet Bank Limited, Keystone Bank Limited, and Enterprise Bank Limited
It is no longer news that the Central Bank of Nigeria (CBN) has revoked the operating licences of Afribank, Spring Bank, and BankPHB for not showing the ability to recapitalise before the September 30 deadline.
When I heard the news, the first thought that came to my mind was the popular and inspiring BankPHB advert: “One day, cars will run on water… and BankPHB is already thinking like that.” The advert suggested a coporate vision for real innovation and growth. Indeed, cars will run on water very soon. It is only sad that BankPHB will never see that day. Like the Israelites, they died in the wilderness with no capacity to reach the Promised Land. Actually, I liked BankPHB…
Afribank? Oh, that was sure to crash one day. Afribank was an antique, a bank of the past- never repositioned for the future. For a bank struggling hard to understand the use of the internet in the 21st century, it’s a wonder they survived that far. But perhaps my criticism is unfair: they served senior citizens very well. They were a wonderful bank for pensioners and aged people- something I’m not sure a more modern bank like GTBank could be.
Spring Bank was one bank I hardly knew anything about. Considering that I’m conversant with quite a good number of our banks, that probably means one thing: they were never really strong… But again, that may just be an unfair statement. Strenght and popularity may not necessarily be directly proportional …
But to the real purpose of my post. Afribank, Spring Bank and BankPHB may indeed be dead, but thankfully the monies of their depositors are not. The CBN formed “Bridge” Banks. It means that the government has taken over the management of the banks and injected capital into them. The good news is that at the moment, they are more or less the safest banks in the country (because they are now the responsibility of the government- an thus beneficiaries of tax-payers’ funds). The bad news is that the shareholders have little or no hope of recovering their funds again for two reasons: First, the shares are virtually worthless at the moment. Secondly, the Assets Management Company of Nigeria has technically bought the assets and liabilities of the companies. This suggests that those shares may very well be non-existent.
Yet again, I am forced to mention my ‘friend’ the CBN governor. I have said many times that I think he talks too much. I’m glad he has been talking a lot less of recent. (Perhaps the challenges of the job are having their toll). I have also insisted that the initial take-over of the banks was a too rushed, too sensational and the situation could have been handled much better. Now, I am forced to wonder if it was not the same CBN that appointed the managements of these now-nationalized banks. But leaving all those aside, why did this nationationalization happen like the proverbial coming of the ‘thief in the night’? Why was it so sudden? The panic dumping of stocks that resulted could have been reduced with ‘due process’ and ‘rule of law’ (which are two phrases we use so much in Nigeria but rarely ever apply).
But then, I see a small window of hope. At the moment, bank shares are at their lowest. A bank like UBA closing with a share value of N4.5! Some (like Unity Bank and Wema Bank) are below N1. Skye Bank is at N5.32 while Oceanic Bank is less than N2. That suggests to me that it is the best time to buy shares. Like Warren Buffests believes, when people are rushing to sell, that’s the time to buy. When people are rushing to buy, that’s the time to sell. People have lost confidence in our banks and the stock exchange is at it’s lowest. But I’m predicting another bull within the next 5 years. So, start buying- and stop selling!