NDIC begins sale of defunct Fortis MFB’s assets

The Nigeria Deposit Insurance Corporation (NDIC) on Tuesday commenced the sale of assets of closed Fortis Microfinance Bank plc by public auction and competitive bid.

Fortis MFB was licensed by the Central Bank of Nigeria (CBN) in 2007 and listed on the Nigerian Stock Exchange (NSE). However, in 2016, the shares of the bank were suspended due to failure to submit its 2016 audited accounts.

The items listed to be auctioned include furniture, fixture, fittings, equipment, generators, and motor vehicles, among others.

A statement from the director, NDIC Lagos office annex, said that the public auction for the furniture, fixture, fittings, and equipment will take place from October 8 to 12, 2019.

“The NDIC, in exercise of its right as liquidator of failed Microfinance banks hereby invites the general public to buy the assets (furniture, fixture, fittings, equipment, generators, and motor vehicles etc) of the Fortis MFB by public auction and sealed bids for motor vehicles and generators, at the following branches,” the statement read.

The auction will take place at different locations in the Federal Capital Territory, Abuja. A top operator who chose to be anonymous said this is good development as it signals to investors that bad MFBs are not allowed to run in the country leading to more confidence in the sub-sector.

The operator was pleased with the regulators on the manner in which they handled the closure and liquidation of the defunct microfinance banks.

In a February statement, the NDIC noted that the various examinations and supervisory interventions of CBN and NDIC revealed that the bank was being run in an unsafe and unsound manner leading to huge non-performing loans, high cost of funds (foreign and domestic borrowings, and fixed/term deposits), exorbitant administrative and personnel costs (especially high emoluments to successive CEOs), and poor corporate governance practices, all of which impacted negatively on its financial condition. As a consequence, the bank was illiquid, could not honour its obligations to its depositors, and became insolvent.

The unhealthy condition of the bank degenerated to the extent that the CBN removed the management of Fortis MFB plc in February 2018 and appointed a four-person Interim Management Committee (IMC) to take over the control and management of the bank.

The IMC which comprised officers drawn from the CBN and NDIC, as well as an independent chairman, were mandated to steer the bank back to sustainability. The IMC managed the affairs of Fortis MFB plc for a period 10 months during which it did all it could to resuscitate the bank and began reimbursing depositors, using funds advanced by CBN for that purpose.

The NDIC had also on September 23, 2019 put on sale the assets of 19 failed microfinance banks located across the country.

 

Hope Moses-Ashike