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Will the CBN apply the hammer? Revealing update on Divestment of Nigerian Banks in insurance subsidiaries

Following the repeal of the Universal banking Guidelines by the Central Bank of Nigeria (CBN) and the directives to all deposit taking banks in Nigeria to divest from all non-banking businesses or set up a holding company structure by end of April, 2012.

Insuranceadvicenigeria.com gives you a detailed update of the CBN directives as it affects bank-owned insurance companies in Nigeria. Our findings are as below:

  •  Prior to the directives, no fewer than 12 banks have either whole or substantial stakes in the insurance subsidiaries
  • Out of 49 insurance companies, at least 16 were owned by banks
  • After the CBN directives, 4 banks decided to set up Holding company structures whilst 9 decided to divest (see table below)
  • As at today, Banks have fully divested from 5 insurance companies whilst about 8 other companies slated for divestment are yet to be concluded.
  • Oceanic Insurance, Zenith General and IntercontinentalWAPIC had Composite (Life and General Insurance) licenses
 NO  BANKS INSURANCE COMPANIES INVESTMENT DECISION CURRENTSTATUS
1 UNITED BANK FOR AFRICA PLC UBA METROPOLITAN LIFE HOLDING COY STRUCTURE RESTRUCTURING IN PROGRESS
2 UNION BANK OF NIGERIA PLC UNION ASSURANCE HOLDING COY STRUCTURE IN PROGRESS
3 FIRST BANK OF NIGERIA PLC FBN LIFE ASSURANCE CO. LTD HOLDING COY STRUCTURE CONCLUDED.
4 FINBANK  PLC FIN INSURANCE COMPANY LTD HOLDING COY STRUCTURE IN PROGRESS
5 DIAMOND BANK PLC ADIC INSURANCE LIMITED DIVESTMENT CONCLUDED. 96.15% STAKE SOLD TO  CORE INVESTOR, NSIA PARTICIPATIONS S.A HOLDINGS, COTE D’IVOIRE
6 GUARANTY TRUST BANK PLC GUARANTY TRUST ASSURANCE PLC DIVESTMENT CONCLUDED. 67.68% HOLDING SOLD TO ASSUR AFRICA HOLDING; A SPECIAL PURPOSE VEHICLE INCORPORATED IN THE REPUBLIC OF MARITIUS FOR THE PURPOSE OF GTASSUR ACQUISITION
7 BANK PHB PLC (KEYSTONE BANK) INSURANCE PHB LIMITED DIVESTMENT IN PROGRESS
8 OCEANIC BANK INT’L PLC OCEANIC LIFE ASSURANCE DIVESTMENT ALMOST CONCLUDED. OFFER MADE BY OLD MUTUAL PLC  IN FEBRUARY 2012
9 OCEANIC BANK INT’L PLC OCEANIC INSURANCE COMPANY LIMITED DIVESTMENT IN PROGRESS
10 SYKE BANK PLC LAW UNION & ROCK INSURANCE PLC DIVESTMENT CONCLUDED. STAKE SOLD TO ALTERNATIVE  CAPITAL PARTNERS and SWEDE CONTROL INTERTEK
11 UNITY KAPITAL PLC UNITY KAPITAL ASSURANCE PLC DIVESTMENT CONCLUDED. STAKE SOLD TO SHAREHOLDERS OF THE PARENT COMPANY (UNITY BANK PLC)
12 INTERCONTINENTAL BANK PLC INTERCONTINENTALWAPIC INSURANCE PLC DIVESTMENT IN PROGRESS
13 INTERCONTINENTAL BANK PLC INTERCONTINENTAL ASSURANCE LIMITED DIVESTMENT IN PROGRESS
14 ZENITH BANK PLC ZENITH GENERAL INSURANCE LIMITED DIVESTMENT IN PROGRESS
15 ZENITH BANK PLC ZENITH LIFE ASSURANCE LIMITED DIVESTMENT IN PROGRESS
16 GREAT NIGERIA INSURANCE COMPANY LIMITED WEMA BANK PLC DIVESTMENT IN PROGRESS. MANAGEMENT BUY OUT
17 SPING BANK PLC (ENTERPRISE BANK) SPRING LIFE ASSURANCE PLC DIVESTMENT IN PROGRESS
18 SYKE BANK PLC EQUITY ASSURANCE PLC DIVESTMENT IN PROGRESS

It would be recalled that the Central Bank of Nigeria (CBN) had directed banks to transit from the Universal banking space to the new system which specifies that they become commercial banks, merchant banks or specialised banks. The regulation, dated October 4, 2010 was released to banks on November 1, 2010 with an order that banks take steps to divest their interest completely before April 3, 2012. It provided that after April 2012, any bank that fails to deliver its existing universal banking license to the CBN will cease to carry on banking business in the country.

The question on the lips of most Nigerians now is: what would the CBN do since the deadline has already expired?

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