Banks play a major role in every nation’s economy. They contribute to economic sustenance, create enabling environments for businesses to thrive, create employment opportunities, help boost the Gross Domestic Product (GDP) of every nation, helps generate capital for investors, facilitate access to loans to assist individuals and small medium scale enterprises amongst others. Because banks play such important roles in financing all economies, staying capitalized is important to keep them afloat. Most of these banks that had their licenses revoked lost it due to recapitalization issues. Some banks also lost theirs due to issues of mismanagement by people at the helm of affairs. The Central Bank of Nigeria can only do so much in helping banks stay afloat before their licenses are revoked and handed over to new management.
Some of these defunct banks are:
Skye Bank
The origin of Skye Bank dates back to 1989 when Prudent Bank was incorporated as a limited liability company. In 1990, the bank was issued a banking license as Merchant Bank. That same year, it rebranded as Prudent Merchant Bank Limited and in 2006, Prudent Merchant Bank Limited merged with four other banks to form Skye Bank Plc. On 21st September 2018, the Central Bank of Nigeria revoked the license of Skye Bank and transferred its assets and liabilities to a newly licensed bridge bank called Polaris Bank. According to the CBN governor, the reason for CBN intervention in Skye bank was due to the failure of its shareholders to recapitalize the bank and to stem the imminent job losses to staff if a liquidation option had been adopted.
Intercontinental Bank
The bank was established in 1989 under the name Nigerian Intercontinental Merchant Bank Limited. In 2009, a special audit of the commercial banks in Nigeria by CBN found nine of the banks to be under-capitalized and badly managed. Intercontinental Bank Plc. was one of the troubled banks that had to be recapitalized and liquidated. In 2011, Access Bank began talks with the Central Bank of Nigeria to acquire Intercontinental Bank. Further to the approval of the shareholders of Intercontinental Bank and Access Bank, court sanction of the Federal High Court of Nigeria and approval of the Central Bank of Nigeria and the Securities & Exchange Commission, Access Bank plc completed the recapitalization of Intercontinental Bank and the acquisition of 75% majority interest in Intercontinental Bank. In effect, Intercontinental Bank became a subsidiary of Access Bank Plc.
Afri Bank
Afri Bank was a commercial banking, real estate and insurance broker based in Lagos, Nigeria. It was established by French investors in 1959 and as at 2010, the bank operated over 250 branches across Nigeria and it was one of the region’s “Big Four” banks. Afribank failed in 2011 and its banking license was revoked by the Central Bank of Nigeria. The assets and some of the liabilities of the now-defunct Afribank Plc. were acquired by Mainstreet Bank Limited the same day Afribank was foreclosed. However, in 2014, Mainstreet Bank was also bought over by Skye Bank and in September 2018, the assets of Skye Bank has been transferred to Polaris Bank by CBN.
Bank PHB
Bank PHB was formed in 2005 by the merger between Platinum Bank Plc and Habib Nigeria Bank Plc. The bank was the fifth largest financial services provider in Nigeria during its time. Its assets were valued in excess of US$6 billion. In August 2011, the Central Bank of Nigeria revoked the operating license of BankPHB as they had not shown capacity and ability to recapitalize before the September 30, 2011 recapitalization deadline. Keystone Bank Limited was also formed in August 2011, the same day Bank PHB’s license was revoked, to take over all the assets and liabilities of the now-defunct BankPHB.
Spring Bank
Spring Bank was formed in December 2005. At birth, Spring Bank had a capital base of approximately US$224 million (N34.5 billion) with total assets estimated at approximately US$988 million (N152 billion). In 2009, following a rigorous audit of all commercial banks in the country by the Central bank of Nigeria, nine commercial banks were found to be under-capitalized and badly managed. Spring Bank was one of the troubled banks. The CBN intervened by injecting new capital to maintain solvency and appointing new management. On 5 August 2011, the CBN revoked the banking license of Spring Bank. Enterprise Bank was then formed the same day to take over the assets and some of the liabilities of the now-defunct Spring Bank.
The foreclosure of some of the banks, particularly intercontinental banks have been said to have some stories behind them apart from being badly mismanaged. Senate President, Bukola Saraki has been alleged to be behind the death of intercontinental bank with the help of his longtime friend and the then CBN governor, Sanusi Lamido. In the light of all these happenings, the question left unanswered is: why does CBN allow billionaires to mismanage and kill banks with no care for shareholders investments or depositors liquidity?
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