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Uncertainty over the fate of Integrated MFB

By Amaka Agwuegbo

There is uncertainty over the fate of Integrated Microfinance bank following its inability to reopen for business three months after it was forced to closed shop by irate depositors.

The bank closed shop in September with the management claiming it was a temporary closure and that the bank would reopen for business in October.

However the bank is yet to reopen and there are conflicting reports for its inability to reopen for business. Though sources in the bank claimed that the reopening of the bank was delayed by internal restructuring and audit being conducted by the Central Bank of Nigeria (CBN)  on the bank.

This claim was however dismissed by CBN sources and MFB operators who claim that the is yet to raise money adequate to meet the demand depositors who would want to close their accounts immediately the bank reopens to the public.

When Vanguard’s visited the bank’s Adeniyi Jones head office in Lagos last week, the bank was still under lock and key while some of its staff sat idly in front of the bank.

One of the staff who spoke to Vanguard under condition of  anonymity said  that the extended closure was due to the internal restructuring presently going on in the bank, coupled with the bank audit being carried out by officials of the CBN. The staff added that the bank would be reopened for business by January 2010 when the internal restructuring would have been over.

“The problems we are experiencing started with the non-performing loan crisis of two of our correspondent banks, Oceanic and Intercontinental Banks, and we had difficulties securing loan facilities from them and this greatly hindered our ability to grant loans and pay for customers’ withdrawals, even as  some of them wanted to close their accounts.

“Also, CBN officials have been auditing our books at the various branches, and this is also hindering us from reopening. This is equally making it impossible for our core investors to pump in more funds into the bank because they have to wait till the CBN officials are through with the audit and have submitted their reports.”

But a source at the Other Financial Institutions Department (OFID), CBN, dismissed these claims, saying that such acts negate the laws establishing MFBs.

“If every time we are examining a bank and it has to shut down, that means that banks like UBA, First Bank and the likes would be closing and reopening all the time. So, it is not true for the bank to say that CBN’s presence is a contributing factor to their prolonged closure.

“Besides, the law expressly states that a bank can’t temporarily shut down without the permission of the CBN and we have not permitted them to temporarily shut down for any reason.”

But there are indications that IMFB’s inability to reopen is not due to the internal restructuring rather it is due to its inability to raise funds to meet depositors’ withdrawals who are ever ready to storm the bank once it opens for business.

According to the Managing Director of an undisclosed microfinance bank, the management of IMFB is afraid of opening the bank because it lacks the money to pay off its depositors who want to close their accounts.

“The truth is that it is not always easy for a bank to reopen after closing. In IMFB’s case, they don’t have the money to pay off their depositors and the investors are not forthcoming. So they are afraid that there would be a run on them by their customers if they decide to open.

When asked if the MFB association is making plans to bail out IMFB, the Managing Director said “The new association is still finding its feet. Besides, IMFB was not a member of the previous association because when we were going for meetings, they thought we lacked better things to do with our time. Now see where they are.”

But this was vehemently denied by an IMFB source, who  said Integrated MFB is on the verge of coming back.

“We are still a very solid bank with strong reserve and we would not suffer from loss of confidence crisis because our customers still want us to reopen and we have investors who are ready to invest in our bank.”

Established in 2006, IMFB within two years became the leading microfinance bank. It became the prime choice of multilateral and local lending institutions and also a multiple award_winning company.

Some of the awards won by IMFB include ‘IMFB 5 Diamonds Award by Mix Market Platform 2009’ ‘Crystal of Excellence Award by CICA 2009’ ‘The Best Microfinance Bank in Nigeria by the Central Bank of Nigeria’ ‘The best MFB in SME Financing West Africa, 2007’ ‘The best MFB in Nigeria by the Federal Ministry of Finance & NTA’ ‘The first MFB in Nigeria with a State License Status’ among numerous others.


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