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CBN’ll not bail out any MFB

By Amak Agwuegbo
The Central Bank of Nigeria, CBN, has urged microfinance banks, MFBs, to shore up their capital base as the apex bank is not going to render any form of bail out options to them.


Speaking at its last closed door meeting with MFB operators, CBN officials stressed that though the CBN doesn’t intend to shut down any ailing MFB, it would not offer any bail out options either.

“The CBN would not shut down any illiquid MFB, but we would not offer any bail out assistance to any bank.”Buttressing its point on not assisting any ailing MFB, the CBN said “In particular, we are suggesting that weak MFBs should either shore up their capital base or merge with stronger MFBs so as to protect their customers’ deposits.”

Pleading anonymity, a Managing Director of a microfinance bank urged the National Association of Microfinance Banks (NAMB) to ensure that, like their commercial banks counterpart, microfinance banks receive the same favourable support from the government and regulatory bodies to enable MFBs achieve their aims.

Meanwhile, the CBN, on Wednesday, said it will liquidate any MFB found engaging in fraudulent practices and hand over its operators to the Ecomonic and Financial Crimes Commission, EFCC.

Mr Olufemi Fabanwo, Director, Other Financial Institutions Department (OFID) told the News Agency of Nigeria that CBN would expose such fraudulent operators.
Fabanwo said if any of the five failed MFB operators is found to be fraudulent, such would be handed over to the EFCC or any other anti-graft agency.
He added that MFBs that are still solvent but needed management experts would be given some kind of special restructuring.

He said the CBN and Nigeria Deposit Insurance Corporation (NDIC) were still conducting examinations on other microfinance banks, pointing out that the NDIC had examined 150 MFBs while the apex bank had carried out similar examination on some MFBs in 2009.

“All licensed MFBs are dully insured by the NDIC and it will step in after the comprehensive report has been compiled,” he said.
The OFID Director, however, assured depositors of the failed MFBs that their money in the banks is safe.

Presently, 930 MFBs are operating in the country with 205 of them based in Lagos.The five failed banks are: Integrated Microfinance Bank, KFC Microfinance Bank, Bristol Microfinance Bank, Unique Microfinance Bank, and Milestone Microfinance Bank, all based in Lagos.


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