Friday, February 24, 2006

Nigerian Banking Consolidation: Matters Arising

The consolidation of the Nigerian banks initiated last year has been achieved. The initiative required commercial banks to raise their capital base to 25 billion Naira. At the end, of the initial 89 original banks, 25 bigger and supposedly better banks emerged. Eighteen banks didn't "make cut" and have since been liquidated.

What is the fate of the depositors in the so-called "failed banks"- the banks that didn't make the cut: What becomes of the funds trapped in these banks?

Many "good things have been said" about the consolidation initiative, primarily about how it will strengthen the Nigerian economy particularly the banking and financial sectors, and ex cetera.

Back to the question, who pays the depositors? Traditionally depositors are insured up to an xxxx amount of Naira.

Would this law apply to depositors under this circumstance?

What steps has the Central Bank, the apex and regulating bank in Nigeria, taken to ease the pain of depositors whose money is now locked up in the failed banks?