There are strong indications that some Primary Mortgage Banks (PMBs) may go under before the end of this year following their inability to meet up with the new capital requirement set by the Central bank of Nigeria (CBN).
CBN had in a notice to all PMBs set December 30, 2013 as deadline for the completion of their recapitalization processes. But CBN had later extended the deadline to June 30, 2014. Despite the extension, investigations revealed that a good number of the firms are still struggling to survive, a development that proved that they might close shop by the end of the 2014 financial year.
Before the recent recapitalization requirement by the apex bank, the PMBs were poorly capitalized with some having a capital base of N100 million or even or even less which accounted for their inability to impact positively on the developmental efforts going on in the country.
Interestingly, under the guidelines for PMBs, mortgage firms have been categorized into National and State mortgage firms, while the National PMBs 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 PMBs are restricted to only one state at the payment of N2.5 billion.
It was however noted that 26 PMBs have attained the state PMB status, having made the N2.5 billion minimum capitalization. Four out of these have properties held for sale, which they were yet to fully dispose off or create mortgages for.
Presenting the state of the Nigerian banks to members of House Committee on Banking and Currency, during their routine oversight visit at the corporation’s Lagos office, NDIC Managing Director, Alhaji Umaru Ibrahim said some the PMBs are experiencing serious difficulty in terms of asset quality.
“We have about 82 in number; some of them are experiencing serious difficulty in terms of poor asset quality, in terms of capital adequacy, in terms of weak management.