Nigerian central bank forms new board for Springbank
The Nigerian central bank has reconstituted a board for Springbank, which it expects will recapitalize the struggling bank to meet new requirements, Central Bank Governor Chukwuma Soludo said on Tuesday.
Springbank was formed in December 2005 from the merger of six banks at the end of a forced consolidation of the sector by the central bank, which had in July 2004 ordered a twelvefold hike in banks' minimum capitalization to 25 billion naira ($190 million).
But Springbank did not meet the requirement and has been struggling ever since because of disagreements between board members from the six original banks over how much each of them was supposed to contribute. "A bank-by-bank contribution to the shareholders' fund revealed that only the former Guardian Express bank and ACB International brought positive capital to the merger," Soludo said in a statement.
"However, despite its weak capital base, the other indicators show that the bank has a strong promise: its deposit base and liquidity situation are strong," he added. The central bank has now constituted a neutral board and will support it to recapitalize Springbank "within the shortest possible time," Soludo said.
In the meantime, he said depositors should go about their normal business with Springbank as their money was safe. The central bank was examining "infractions" by directors and managers of the six original banks and would report them to the Economic and Financial Crimes Commission in due course, Soludo said.
He also said that the central bank was compiling a list of non-performing loans of the bank and action would also be taken against those responsible.