By Omoh Gabriel, Business Editor
The Central Bank of Nigeria CBN has released the procedures manual for bank consolidation in the country. The procedures requires that consolidating bank will go through three process, pre-merger consent from the CBN, approval in principle and final approval. At each stage of the process banks are expected to meet a set of conditions spelt out by the apex bank.
According to the CBN the pre-merger requirement include among others
‚ÄúA formal application by the merging banks addressed to the Governor of Central Bank of Nigeria and signed by the Chairmen and Managing Directors of each of the merging banks accompanied with the following,;
‚ÄúThe proposed name of the succesor bank.
* Memorandum of Understanding between the merging banks.
* Current Memorandum and Articles of Association (MEMART) of each of the merging banks.
* Resolution by each of the boards of the merging banks approving the merger.
* Resolution of the shareholders at the AGM or EGM.
* List of significant shareholders of the existing banks (i.e shareholding of 5% and above) showing their names, business and residential addresses (not P.O.Box).
* Organisational structure, showing functional units, reporting relationships and grade (status) of heads of departments/units of the merging banks.
* List of Directors, designation and the interest they represent in the merging banks.
* List of the top management team (AGM and above) of the merging banks and their designation.
Copies of CBN approvals of the appointments of the directors and top management team listed in paragraph‚Äù and
In the case of APPROVAL-IN -PRINCIPLE, the CBN requires
* Draft Memorandum and Articles of Association (MEMART) of the successor bank.
* List of significant shareholders of the successor bank (i.e. shareholding of 1% and above) showing their names, business and residential addresses (not P.O.Box). Organisational structure, showing functional units, reporting relationships and grade (status) of heads of departments/units of the successor bank.
* List of Directors, their curriculum vitae, designation and interest they represent in the successor bank.
* List of the proposed top management team (ACM and above), designation and their detailed curriculum vitae.
* Method of valuation agreed to by the banks.
* Draft Scheme of Merger.
* Due diligence report on each of the merging banks. And for final approval merging banks are to submit
* Formal application accompanied by the following documents;
* Original banking licence(s) of the merging bank(s).
* The Scheme of Merger approved by Securities and Exchange Commission.
* Business/Strategic plan of the successor bank for the next five years showing how the integration process will be managed, future goals and operations, branch expansion/rationalization, treatment of surplus staff and staff to be retained, etc.
Certificate of incorporation of the successor bank.
* CTC of CAC form 2.5 ‚Äî return of allotment.
* CTC of CAC form 2.3 ‚Äî particulars of directors.
* CTC of form CAC 6 ‚Äî location of principal place of business.
* Evidence of de-registration of the relinquent banks by CAC.
* SEC final approval of the merger.
* A signed undertaking from each proposed Director that he/she will comply with the code of conduct for Directors as the CBN shall from time to time prescribe.
* Opening Statement of Affairs showing the details of the capital base.
* Evidence of stamp duties paid to Federal Inland Revenue Service on the new authorized share capital.
* Schedule of disengaged staff, including the total severance package and mode of settlement.
* Schedule of retained staff, including their placements.‚Äù
According to the CBN ‚ÄúBanks that are undergoing consolidation shall continue to transact business under their old names and licences but should not embark on further expansion or new capital projects until CBN final approval is given to the successor bank.‚Äù further the guidelines stated that ‚ÄúWithin a maximum of five (5) working days of the receipt of an application seeking for pre-merger consent, the CBN shall issue a no objection letter or a rejection letter, informing the applicants of the reasons for rejection.
The CBN rules stipulates that ‚ÄúOn receipt of application for final licence, the processing officer shall: Ensure that the application has been duly registered.
‚ÄúDispatch status enquiries on new shareholders/directors to other regulatory authorities viz: NDIC, NAICOM and SEC, (if any, where such clearance had not been obtained earlier).
‚ÄúDispatch completed Personal History Statement (PHS) forms accompanied by the CVs of the new shareholders/directors to the State Security Services to carry out security screening of the proposed shareholders/directors (if any, where such clearance had not been obtained earlier).
‚ÄúAscertain the fitness and properness of the new shareholders/directors through the responses received from the security agencies and status enquiries from SEC, NDIC, NAICOM, CRMS and CBNÃìs Black Book (if not already done).
‚ÄúEnsure that in the board composition the number of non-executive directors is more than the number of executive directors and that the board is not more than 20 directors. ‚ÄúEach of the directors shall sign an undertaking that he/she will comply with the code of conduct for directors as the CBN shall from time to time prescribe.
‚ÄúCompare the provisions of the scheme document in respect to staff to be disengaged or retained with the information provided on same in the schedules of disengaged and retained staffThe CBN procedures for merger declared ‚ÄúSubject to the promoters compliance with all the relevant requirements and receipt of satisfactory status enquiries and security reports, the processing officer shall prepare an appraisal memo to the Director of Banking Supervision requesting him to recommend to the Governor, the issuance of a new banking licence to the emerging bank.
A new banking licence signed by the Governor will be issued to the successor bank.
The old licences of the merged banks will be withdrawn.‚Äù