FRESH facts emerged last week that the Central Bank of Nigeria (CBN) may have shifted by six months the deadline for the recapitalization of Primary Mortgage Institutions (PMIs) in the country.
The apex bank had initially granted the mortgage firms a 12-month deadline from November 1, 2011, which would have terminated by December 12, 2012, but extended to 18 months, by April 30, 2013. Another circular was issued in March 20, 2013 to extend the date to December 2013, which according to CBN will afford all affected PMBs sufficient time to exercise any of the options for capital raising, business combination and downscaling.
It was revealed that CBN gave six months moratorium to some mortgage banks that have a national spread, that already made payment of N2.5 billion for state license to close their branches or upgrade to N5 billion national license. In the circular, the firms are expected to close their branches nationwide, if they could not comply with the new directive by the end of June.
The new extension will also enable CBN officials to verify PMBs submissions and allow sufficient time for capital verification and necessary regulatory approvals. Sources disclosed some of the affected mortgage banks, including a federal institution are seeking further injection of funds to retain their national spread.
Under the fresh guidelines, mortgage firms have been categorized into National and State mortgage firms, while the National PMIs are allowed to operate in any or all parts of the federation after the payment of a new N5 billion minimum paid up capital, the State PMIs are restricted to only one state at the payment of N2.5 billion.
Sources further disclosed that the mortgage firms led by its national body –Mortgage Banking Association of Nigeria (MBAN) have lobbied the CBN’s Other Financial Institutions Department (OFID) to soft pedal on the announcement of the about 38 PMIs that have been adjudged to be financial sound and undergone recapitalization to limit crisis of confidence rocking the sector.
It was further gathered that series of talks have taken place between some of the recapitalized and non-recapitalized banks in move to ensure soft landing for most mortgage firms through mergers and acquisitions. This was confirmed by one of the affected mortgage institution, who disclosed that a deal was recently brokered to shift customers’ liability to the new firm
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Recently, CBN explained that its rationale for the State PMIs is to promote the spread of mortgage firms across the six geo-political zones to further embed the objective of financial inclusion and national PMBs will provide options for operators to remain in business at different authorisation levels, and similar to other banking segments.
It is a known fact that the sector is facing a harsh economic down turn, notwithstanding the global economic crisis as the scarcity of long-term funds are hitting the operators hard. The short-term funds are mostly sourced from the money market, where commercial banks also complete for funds
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Their cash flow is also hampered by their inability to tap into the National Housing Fund (NHF), and becoming a window for the collection of the fund, which has prompted MBAN to liaise with the Federal authorities, local financial institutions and international development agencies to float a Mortgage Refinancing Company.
Sourc: Guardian Newspaper
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