Confidence Restored In Bridged Banks ? AMCON
Wed, 22/08/2012 ? 12:32am | BUKKY IDOWU Banking Business

The Asset Management Corporation of Nigeria (AMCON) has said confidence has returned to the bridge banks, as they have been able to cut down on their costs of operation as well as increase deposit base.

According to AMCON?s Executive Director, Finance and Operations, Mrs Mofoluke Dosunmu, the banks were able to cut down on cost by some drastic cost cutting steps which included letting go of some staff that were not adding value to the banks.

?A lot of waste has been stopped. Leakages have been stemmed. I?m sure you are aware that over the years, there have been some adjustments in their staffing whereas people that were not really contributing to the bottomline of the banks have been successfully exited.

?So you find? that even the operational cost of running those institutions have come down. Now you have in addition, more focused management team who are aware that they are there for a specific purpose. They have specific terms of reference. They are measured particularly against the background that what went into these banks is coming from a sinking fund that was contributed by other banks,? she said.

Speaking on the performance of the banks, which were bridged by the corporation about a year ago, she said that the segregation among the banks has fizzled away, as the bridge banks now compete with their counterparts in the banking business.

?In the first place we have restored? confidence in the industry. Before, you had a kind of segregation in the market, some banks were healthy, some were not healthy. Now you don?t have that anymore, because what we saw was that initially when the banks (bridged banks) started they did lose some depositors? funds. But when the customers saw that anytime they walkedinto those institutions they got their money back, they started banking with them,? she said.

Besides, she noted that the bridged banks have been able to reduce their costs of funds because current account balances now constitute a higher proportion of their? deposits unlike a? year ago when term deposits, which were at high interest rates formed the bulk of their deposits.

?They?ve (bridged banks) decreased their reliance on term deposits. If you look in terms of percentages from what you had before ? where you had current account deposits being only about 30 per cent, now it?s almost 50 per cent. So that has reflected in the confidence level of? the banks. It has reduced the cases of fraud and it also reflects in their other income like fees and commissions because people don?t just put money in current account, they actually do business with the institution, which result in things like COT, fees, commission,? she explained.

AMCON recently announced its appointment of Citi and Renaissance Capital to determine the value of Keystone, Enterprise and Mainstreet? ?the defunct BankPHB, Spring Bank and Afribank and prepare them for sale or for listing on the Nigerian Stock Exchange.

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