Wema Bank says it has reduced its bad loans by N21 billion. Tunde Olofintila, the bankâ€™s Head, Corporate Communications, made this known in a statement.
According to him, â€œfollowing the joint examination of the books of all banks in the months of August and September 2009 by the Central Bank of Nigeria (CBN) and the Nigerian Deposit Insurance Corporation (NDIC) Wema Bank, amongst other banks, was found to have inadequate capital within the context of the relevant regulation on minimum capital requirement. Upon the directive of the CBN to shore up our capital to the statutory minimum by June 30, 2010, we immediately commenced our recapitalisation programme, which has been extensively discussed and agreed with the CBN, and is anchored on the following pillars:
Â·Recovery of delinquent loans through internal efforts and resolution of some of our delinquent risk assets using the Asset Management Company of Nigeria (AMCON) window
Â·Raising additional equity through special placing
Â·Application for a Regional Banking License
â€œWe are pleased to report that with the significant level of recoveries made through our untiring internal efforts, we have been able to reduce the quantum of bad loans in our books by over N21 billion. By extension, these recoveries have also impacted our capital positively given the accompanying reversal of the sums recovered from loan loss provisions.â€
He lauded the â€œbold initiative of the CBN in setting up AMCON to buy over some of the toxic assets in the books of banks. Wema Bank will be approaching AMCON with a substantial portion of our delinquent loans to discount when the Corporation becomes operational. Given the quality of the securities in place, we expect to recover a good portion of the loans through this window.
â€œApprovals to issue new shares and embark on a special placing offer were obtained from the Board of Directors and ratified by shareholders at the last Annual General Meeting of the Bank held on June 11, 2010. Shareholders have also endorsed the decision of the Board to obtain a Regional Banking License when the proposed new licensing regime comes into effect.â€
He also said a good number of individual and corporate investors have expressed strong interest in taking up the new shares â€œwe are issuing under the special placing. Discussions with these prospective investors are at an advanced stage and we are optimistic that the Bank will achieve a deal closure with them and thereafter seek regulatory approvals for the deal before the new deadline of September 30, 2010 expires.
â€œWema Bank has returned to the path of profitability and continues to make progress, entrenching sound corporate governance standards in our operations. Within a space of one year, we have been able bring our Bank back from the precipice to a path of profitability as evidenced by our financial performance at end of first quarter of 2010. While thanking you, our esteemed stakeholders, for your abiding faith, unalloyed loyalty and unparalleled support, we want to assure you that Wema Bank, your Bank, remains standing and is growing stronger by the day.â€