Prime Bank’s liquidation creates panic in the banking industry

The liquidation of Prime Bank Gambia has caused some general panic and confusion in the banking industry, as customers of both the bank and other banks in the country are afraid that such a big bank is wrapping up at this point in time.

The bank has been the second to close down in two years.

The Central Bank of The Gambia on Tuesday issued a press release stating that Prime Bank is closing down its operations in the country because its parent company, Societe General de Baque Liban, has opted to divest its subsidiary in The Gambia, hence the decision not to augment the bank’s capital to the required minimum capital of D200 million. 

Prime Bank is sufficiently liquid to meet its obligations to depositors, other creditors and any other person entitled to funds or property thereof.

The customers, who are compelled to withdraw their savings from the bank, have raised concerns over the bank’s closure. 

“I was shocked when I hear this sad news on the television. It has been my preferred bank but we the customers are left with no other choice except to withdraw our savings,” says one of the bank’s customers who spoke on condition of anonymity, after taking her deposits from the bank.

Prime Bank is the second financial institution in the banking industry to liquidate, after Oceanic Bank also failed to meet the minimum capital requirement of D150 million in 2010.

“Now which bank is going to close next,” Ousman Jammeh, a customer of one of the local banks in the country, asked rhetorically, while expressing concern over the closure of Prime Bank, a bank he said one of his friend was banking with.

Nigerian Bank in Gambia sells shares to increase capital requirement

Skye Bank Gambia Limited, subsidiary of Skye Bank Plc in Nigeria, is in the process of selling about D100,000 worth of its shares to a foreign financial institution through private placement to meet the Central Bank of The Gambia’s directive that all banks in the country must augment their capital to D200 million by the end of this year, the paper can reveal. 

Impeccable sources close to this paper states further that the bank is in negotiation with some international financial institutions targeted for private placement, which is the sale of securities, including shares, of a company to a small number of selected investors as a way of raising capital.

Private placement is an attractive alternative for growing companies and it is a quicker form of raising money for a business.

Skye Bank Gambia MD, Mr Yusuf

Skye Bank’s Managing Director Akim Yusuf has confirmed the transactions but says “we are still in the preliminary stages”.

He explains further: “What we have agreed with the international financial institutions is to increase our capital by D100 million; so rather than the [additional] D50 million that the Central Bank is asking for, we have actually found an agreement for a D100 million (increment).” 

Mr Yusuf added that the bank is going to have above D200 million at the Central Bank by the end of this year. 

“Our target is D250 million but in case of any disappointment or shortfall from the side of the financial institutions, it will still be more than the D200 statutory capital requirement,” MD Yusuf said, adding: “Even in the case of a shortfall, from the work we have done we will not be below D210 or D220 million by the end of the year.” 

The Skye Bank boss said some of the financial institutions have already made financial commitment, not just on paper but by handing out cash.  “So we are very hopeful that the exercise is going to be a success,” he said.

AGIB D77m less in meeting Central Bank’s capital requirement

The Arab Gambian Islamic Bank is in need of D77 million to increase its minimum capital requirement to D200 million in line with the regulation of the Central Bank of The Gambia (CBG). 

The shareholders fund of the bank has dropped to D123 million as a result of the managerial provisions of the bank, according to the board chairman’s report, which says it is “compelled to seek an additional D77 million to meet the D200 million minimum requirement”.

At the 2^nd Annual General Meeting of AGIB - since it was taken over by FinBank Plc, a Nigerian bank, - on Tuesday at the Coco Ocean Resort and Spa, the chairman of the Board of Directors of the bank, Adam Nuru, told shareholders of AGIB that the Board “would be seeking” its shareholders’ endorsement and permission to raise the additional equity to meet the minimum capital requirement”. 

The CBG in 2008 issued a directive for all the banks in the country to minimum capital requirement of 

shareholders fund to D150 million and D200 million by end of December 2010 and 2012 respectively.

AGIB has successfully met the first part of the increment after provision of US$2 million in June 2009 by the parent company – FinBank Plc - and it is auspicious of meeting the 2012 deadline on time.

“It is my belief, Insha Allah, that working together we would be able to meet this target come December 31^st 2012,” Chairman Nuru said.

RECAPITALIZATION IN 2012: Banks to Increase Capital Requirement to D200 Million

The final round for the increment of capital requirement of banks operating in The Gambia is to take effect December this year, lest the bankers forget. 

The call for the increase of capital requirement started in 2008 when the Central Bank of The Gambia (CBG) issued a directive increasing the minimum capital of banks in two stages from D60 million to D150 million by end-December 2010 and to D200 million by end-December 2012.

 

By the time of the first deadline, December 2010, eight of the fourteen banks, then, were able to increase their capital requirement on time. Five of the six remaining banks did so at the eleventh hour when the Central Bank, through the Ministry of Finance, threatened to revoke the banking licence of any bank that would default in meeting the requirement.