The dust is yet to settle on the recapitalisation exercise in the mortgage sector even as the Central Bank of Nigeria (CBN) confirmed that 32 primary mortgage banks (PMBs) have met the required criteria and licensed to operate in the country, out of 89 that were in existence before the exercise. 15 PMBs were also said to have converted to either microfinance banks or finance companies.

CBN’s Director, Corporate Communication Department, Mr. Ibrahim Mu’azu, confirmed to Vanguard that a total of 32 PMBs, made up of 10 National and 22 State PMBs, are currently licensed by CBN, adding that the number is likely to rise. “Currently, there are 32 PMBs licensed by the CBN, of which 10 are National and 22 are State. The number may likely increase with time,” he said.

It will be recalled that under a new guideline, CBN requested the then 89 primary mortgage institutions (PMIs) in the country to recapitalise to N5 billion and N2.5 billion to operate as National and State PMBs, respectively, with a 13-month deadline from November, 2011 to December, 2012. While the National PMBs are allowed to operate in any or all parts of the federation, the State PMBs are restricted to operate in one state. This caused a lot of ripples in the industry, prompting the apex bank to extend the deadline for compliance to April 30, 2013. But in another circular issued on March 20, 2013, CBN extended the deadline to December 2013, to afford all affected PMBs sufficient time to exercise the options for capital raising, business combination or downscaling. It later extended the recapitalisation deadline to ensure conclusion of on-going transactions to June 30, 2014.

The apex bank also issued revised guidelines streamlining areas of operations for PMBs. The new guidelines restrict the operations of PMBs to the provision of mortgage finance and excluded other related activities such as the provision of estate management duties. They are authorised to among other services to engage in the business of mortgage finance, real estate construction finance, acceptance of savings and time/term deposits and acceptance of mortgage-focused demand deposits. Other approved services include drawing from mortgage funds, including National Housing Fund, NHF, facility for on-lending, financial advisory services for mortgage customers and other services approved by the CBN.

Previously, mortgage firms were allowed to grant loans or advances for the purchase or building, improvement or extension of a dwelling/commercial house, acceptance of savings and deposits, management of pension funds/schemes, performing estate management duties as well as offering of project consultancy services for estate development and engaging in estate development through loan syndication.

Although CBN did not make available the list of the newly licensed PMBs, Vanguard however, gathered from reliable sources that the following attained National PMB status, having successfully met the N5 billion minimum capital requirements. They are: ASO Savings & Loans Plc; Sun Trust Savings & Loans Ltd; Mayfresh Savings & Loans Ltd; Abbey Building Society; Infinity Trust Savings & Loans Ltd; Platinum Savings & Loans Ltd; Trust Bond Savings & Loans Ltd, Imperial Homes Savings & Loans, Haggai Savings & Loans and Jubilee Life Savings and Loans Ltd.

A top official of one of the successful PMBs told Vanguard, on condition of anonymity, that the Other Financial Institutions Department, OFID of the CBN had conveyed the approval in a circular to the respective Managing Directors of the successful mortgage banks last year, following the review of the submissions of the various PMBs. He added that the apex bank also noted that 26 PMBs met the N2.5 billion capitalisation for State PMBs but 4 of them were still in the process of disposing properties to make up the capital.

According to him, the circular to the successful PMBs, dated February 14, 2014, and entitled “Re: Compliance With the Minimum Capital Requirement”, stated: “Our assessment of the financial position and records of your institution as at December 31, 2013, against the requirements of the revised Guidelines for Primary Mortgage Banks (PMBs) in Nigeria, show that your PMB has satisfied the prescribed minimum capital requirements for a National Primary Mortgage Bank.”

It further stated: “26 PMBs have attained the state PMB status, having made the N2.5 billion minimum capitalisation. Four out of these have properties held for sale, which they were yet to fully dispose off or create mortgages for. 15 PMBs down scaled and converted to sub-sectors with lower capital requirements such as microfinance banks and finance companies, 26 PMBs failed to meet the prescribed minimum capital requirements for either of the two categories and do not have acceptable capitals for downscaling and, or conversion.”

All efforts made to get further information from CBN’s Other Financial Institutions Department, which supervises PMBs, proved abortive as there were no responses from both the Director and Deputy Director when contacted severally on the matter.

Also when contacted on the matter, the Executive Secretary, Mortgage Banking Association of Nigeria (MBAN), Mr. Kayode Omotosho, said that the list of licensed mortgage banks was still being expected from the CBN.

Stakeholders have held different views on the implication of the prolonged recapitalisation exercise in the mortgage sector. While operators with capacity to meet the requirement faulted the continuous shift of the concluding date of the exercise by CBN, those who could not easily meet up supported the extension.

Some mortgage bank account holders who spoke with Vanguard decried the continuous silence of the CBN on the outcome of the recapitalisation exercise, noting that it was creating an atmosphere of uncertainty in the sector.

Teslim Kolade said he maintains an account with his PMB because he knows it has met the recapitalisation requirement, a public announcement of the list of recapitalised PMBs by CBN will be more re-assuring. According to him, official release of the list of successfully recapitalised PMBs by the CBN will settle all doubts”. Another customer, Ify Chukwuma, said she saves with a mortgage bank to enable her access the National Housing Fund (NHF), but the uncertainty surrounding recapitalisation exercise is making her apprehensive. “I maintain an account with a mortgage bank because I’m interested in obtaining NHF loan, but I don’t want my savings to go under if my PMB’s license is eventually not renewed. So CBN should please come out with the list of those that have made it,” she asserted.

It was also gathered that MBAN, which is the umbrella body of mortgage banks in the country, lobbied the apex bank to soft pedal on the announcement of PMBs that have been adjudged to have successfully completed the recapitalisation requirements in order to limit crisis of confidence in the sector. Reliable sources further disclosed that series of talks have taken place between some of the recapitalised and non-recapitalised banks to ensure soft landing for most mortgage firms through mergers and acquisitions.

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