ABUJA, April 22 (Reuters) - Nigeria’s Savannah Bank, once one of the nation’s top 10 financial institutions, could soon restart operations, seven years after regulators declared it bankrupt, a senior company official said.
Savannah Bank of Nigeria regained its operating license in February after an appeals court ruled its revocation by the central bank in early 2002 was unconstitutional.
“We are ready to re-open the bank after a joint verification of the 108 branches across the nation with NDIC (Nigeria Deposit Insurance Corporation) officials,” said Jim Nwobodo on behalf of the bank directors late on Tuesday.
The central bank declared Savannah Bank bankrupt in February 2002 and shut its operations, sending shockwaves through the financial sector of sub-Saharan Africa’s second-biggest economy.
More than a dozen smaller banks soon faltered for separate reasons, setting the stage for a round of consolidation in 2005 which cut the number of financial institutions to 25 from 89.
Before reopening Savannah branches, bank and NDIC officials said they will conduct an audit to determine the company’s assets.
Regulators warned the bank’s directors that it could face some difficulties returning to business in the current economic climate.
“Your immediate challenge would be how best to handle the pent-up demand of depositors,” said Ganivu Ogunleye, NDIC’s managing director.
“Furthermore, you would need to develop innovative market penetration strategies as the financial market has witnessed a remarkable transformation since your bank went out of business,” he added.
Nigeria’s financial sector faces a liquidity crisis which could weed out some of its weaker banks and prompt a second round of consolidation.
Poor disclosure levels fuelling mistrust between counterparties, a sharp fall in the Nigerian stock market, and the reduction of foreign credit lines due to the global economic meltdown have all contributed to the growing sense of crisis.
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