Diamond Bank, Keystone, Other Battle Liquidity Issues

Uzoma Dozie, Managing Director.CEO, Diamond Bank Plc

Things may not be smooth-sailing for three commercial banks in the country, now in a desperate bid to shore up their capital bases, having been indicted by the Central Bank of Nigeria (CBN).

The banks which include Diamond Bank Plc and Keystone Bank were not expressly mentioned in the CBN’s economic report released for the half year ended June 2018, as having liquidity issues, but competent industry operators look in the direction relying on some recent antecedents.

Apparently, the three had fallen short of the Minimum Regulatory Liquidity Ratio of 30% as assessed by the apex bank, a situation that questions their ability to fulfill their fundamental obligations to their banking publics.

In the case of Diamond, quick reference is made of a fine of N250, 000,000.00 (Two Hundred and Fifty Million Naira Only), slammed on it by the CBN in respect of breaches bordering on foreign exchange remittances.

The bank carried out that transaction on behalf of telecommunication giant MTN Communications Nigeria Limited.

Although a business intelligence platform had argued that the bank was not feeling any impact of the fine, observers argue to the contrary, one analyst listing on his fingertips, some fiscal issues likely to crop up if a Tier Two bank is made to cough out N250m in one stretch.

It was equally in the news recently that the bank had shut down its overseas subsidiaries, including  Diamond Bank (United Kingdom) Plc, Diamond Bank du Benin SA, Diamond Bank Togo, Diamond Bank Senegal, and Diamond Bank Cote d’Ivoire.

Add this to a slide in its deposit base by about N30m, from N1.42trillion as at the same period in 2016, to N1.39trillion as at end 2017 financial year, the picture  becomes clearer.

Obeahon Ohiwerei, Managing Director of Keystone Bank

In fact,  a non-signed release accessed from the bank’s website affirmed the four Board Directors have tendered their resignation and would step down with immediate effect. Identifying the four members as Mr. Seyi Bickersteth, Mrs. Aisha Oyebode, Mr. Rotimi Oyekanmi and Ms. Juliet Anammah, the relases said they were leaving for personal reasons.

Another factor is the imminence of a new core investor.

In the case of Keystone Bank however, it was, in March of last year, acquired from the Asset Management Corporation of Nigeria (AMCON) by the Sigma Golf Nigeria Limited and Riverbank Investment Resources Limited (the Sigma Golf-Riverbank consortium).

AMCON MD, Ahmed Kuru last June, stated that the bank was sold for N41 billion, with latest indications that the bank has begun desperate moves to shore up liquidity. In the unlikely possibility, it would also be up for takeover by the CBN for the injection of the needed funds.