Over nationalisation of Bank PHB (Nig) Governor -Sesay says “Depositors funds are quite safe” at Bank PHB (SL)

The Governor of the Central Bank Sheku Sambadeen Sesay has moved swiftly to quell any fears surrounding the liquidity and solvency of Bank PHB (Sierra Leone) whose principal shareholders Bank PHB Nigeria was last week nationalised by the Central Bank of Nigeria.
Governor Sambadeen Sesay on Monday 8th August issued a press release assuring depositors that Bank PHB (SL) “is solvent” which means that “depositor’s funds are quite safe.” The release further assured that Bank PHB (SL) is “well capitalised, meeting both the minimum paid –up capital and capital adequacy ratio”.
The nationalisation of Bank PHB (Nig) by the Nigerian Central Bank last Friday came as a shock to many in the banking Industry here in Sierra Leone. As analysts watched the developments unfold in Nigeria the question on many lips was whether Bank PHB (SL) was strong enough to stand on its own; and in the event of the bank not meeting its paid up capital whether its parent body would be able to inject more cash into the bank so that it can meet its statutory obligations to the Bank of Sierra Leone.
These questions were put to rest by Central Bank Director of Banking Supervision Tapsiru Dainkeh who told Awoko Business that “the 2011 half yearly accounts (of Bank PHB – SL) even though unaudited show that the Bank (PHB- SL) is making profit and as the trend goes they are likely to meet the paid up capital of 21 billion Leones by the end of the year.”
MD Bank PHB (SL) Nosiru Gbadamosi, also reiterated to Awoko Business that “since October last year we have been making profit” adding “we are strong and formidable as any bank in Sierra Leone.”
Questions were further raised as to whether Bank PHB (SL) would continue operating under the same name since its parent body has been re-branded as Keystone Bank.
Mr. Dainkeh further explained that as far as the Bank of Sierra Leone is concerned Bank PHB (SL) is an independent institution registered in Sierra Leone, and that it is not seen as a subsidiary of Bank PHB (Nig). However he said if Bank PHB (Nig) which owns Bank PHB (SL) has changed its name to Keystone Bank, then it is up to the Bank PHB (SL) to put in a request to the Bank of Sierra Leone for a change of name if they so desire.
For his part Nosiru Gbadamosi the Managing Director of Bank PHB (SL) explained to Awoko Business that “Bank PHB (SL) and Bank PHB (Nig) are two separate entities entirely,” adding that “the only connection is the initial capital that was invested by Bank PHB (Nig).”
Bank PHB (Nig) is one of 3 commercial banks (the other two are Spring and Afribank) which was asked by the Nigerian Central Bank Governor Sanusi Lamido Sanusi to re-capitalise by the 30th September 2011.
Last Friday 6th August, the Nigerian Central Bank authorities, took the decision to revoke the license of the three banks after it ruled they were unable to finalise arrangements with their partners for re-capitalisation. The three banks were then handed over to the Nigeria Deposit Insurance Corporation (NDIC) on Saturday. NDIC, in turn, created bridge banks as temporary holding companies to assume the assets and liabilities of the failed banks while facilitating their resolution. The three bridge banks are Mainstreet Bank plc (Afribank), Keystone Bank plc (Bank PHB) and Enterprise Bank plc (Spring Bank).
The Asset Management Corporation of Nigeria (AMCON) then acquired the three banks from NDIC after a subscription agreement had been executed paving the way for the injection of $4.5billion (N678 billion) into the new banks.
Managing Director and CEO of AMCOM Mustafa Chike-Obi is reported as saying “Mainstreet, Keystone and Enterprise Banks are going concerns and have banking licenses to operate, so no money will be lost. AMCON shall retain ownership of the three new banks for three years until new owners are found for them to take them over”.
New Directors and new Boards were then appointed to run the operations of the three financial institutions. Jacob Ajekigbe, a former Managing Director of First Bank of Nigeria Plc, has been named as Chairman of Keystone Bank which was formerly Bank PHB plc and Oti Ikomi as Managing Director.
MD Bank PHB (SL) Nosiru Gbadamosi, confirmed that Bank PHB (Nig) are 100% shareholders of Bank PHB (SL) “so their (Bank PHB-Nig) investment here are assets and these assets have been transferred technically to Keystone”
Out of the $4.5billion (N678 billion) raised through the sale of government bonds for injection into the new entities to re-capitalise all three banks, Keystone bank which took over Bank PHB (Nig) has received fresh capital of 1.8billion Naira making the bank “even more capitalised now.” The fresh funds will now enable the three troubled banks to meet the capital adequacy ratio of 15% required by the Central Bank of Nigeria.
In 2009 the banking Industry in Sierra Leone witnessed a nearly seamless takeover of ProCredit bank by the regional giant ECOBANK.
This was after the ProCredit authorities informed the Central bank that they were not willing to re-capitalise and meet the statutory requirements of a commercial bank because their core operations were micro financing and not commercial banking per se.
Local analysts have since opined that Bank PHB may be going down the same road as a result of developments in the home country Nigeria.
This has been stoutly resisted by MD Gbadamosi, who said that such a proposition “is not attractive,” because “the bank is making profit and you would not sell something that is making profit.” He revealed that Bank PHB (SL) is one of four subsidiaries, with the other three being in Gambia, Liberia and Uganda. Gbadamosi disclosed that in Uganda they are infact one of the topmost bank so the thinking would not be to sell.
Gbadamosi also disclosed that when Bank PHB (SL) was set up the thinking was that when the bank starts recording a profit they would divest 25% shares to the Sierra Leonean public to ensure that the bank takes root as a truly Sierra Leonean entity. Presently he says Keystone has only one representative on the Board of Bank PHB (SL), while the Chairman and other Directors are all resident in Sierra Leone.
The Bank PHB (SL) Managing Director maintained that since the new Directors of Keystone have more funds from the injection of new capital what he is looking forward to is “additional capital to enhance our operations here.”