There are indications that the Central Bank of Nigeria (CBN) has extended deadline for deposit money banks to divest from non-banking operations from May 14, 2012 initially put as the deadline.Investigations showed that the apex bank has  extended the deadline by one year for some of the affected banks which have insurance subsidiaries.
The divestment directive came on the heels of the repeal of the universal banking model which allowed banks to render different forms of financial services. BusinessWorld Intelligence revealed that although some of the banks have complied, the extension became necessary for smooth divestment, since the banks involved were either totally divesting from their subsidiaries or adopting the group holding structure.
Mr. Mohammed Abdullahi, head, corporate communications, said “the deadline for the divestment has not changed as it remains May 14, 2012, but until the CBN makes a pronouncement to that effect.  The issue of granting extension does not arise for now since the deadline is still far. According to the National Insurance Commission, no fewer that 12 banks either have whole or substantial stakes in the insurance sector. Many of the bank insurance subsidiaries had not clearly stated their divestment plan or given actual dates,  and this means meeting the deadline of May 14, 2012 would not be feasible hence the CBN  extension. Mr. Fola Daniel, commissioner for insurance, had said recently that only a few of the insurance firms had concluded and sent their divestment plans to the National Insurance Commission. “As at now, many of the firms are still talking and have not yet concluded their divestment plans.  Some foreign investors have, however, bought stakes in some of the subsidiaries,” he said.
Daniel added that it was not possible to give the percentage of stakes that were sought by the foreign and local investors in the banks’ insurance subsidiaries because the divestment process was still in progress.
According to him, Naicom is interested in matters that concern the insurance subsidiaries of the banks and the investors that will take over them. Because of the long-term funds in life insurance business, Daniel said a life insurance company could not be allowed to go down, but should be taken over by or merged with another firm.
“The banking institutions owning insurance companies are actually divesting and we are quite satisfied with the progress recorded in that area”, he said. The commissioner gave an assurance that Naicom had put in place appropriate measures to ensure that no stakeholder was short-changed or put in a disadvantaged position as a result of the divestment.
Investigation also revealed that foreign investors were showing more interest than local investors in buying the bank-owned insurance companies.
Following the repeal of the universal banking model last year, Naicom officially inaugurated an advisory committee to monitor the divestment process. The committee was to review the apex bank’s divestment directive concerned the bank-owned insurance companies; and identify risk and challenges in the implementation of the divestment from the perspective of policyholders’ protection and corporate governance.
Guaranty Trust Bank Plc was the first to announce the sale of its 67.68 per cent equity stake in GTA to Assur Africa Holding, while a foreign investor also indicated interest in ADIC Insurance.