Micro bank doles out money piecemeal

Treasures Microfinance Bank has told its customers that they could only withdraw their deposits in small amounts, so as to save it from liquidation. However, this measure has not gone down well with its customers. An executive of the bank, who asked not to be named, said in an interview, "We can't meet up obligations hundred percent. But we have actually said if you have N10, 000, collect N5, 000, I mean fifty-fifty percent. With that, you will be able to collect everything you have. If you are saying you want to give back to everybody hundred percent of what they brought in, that means you are going to liquidate the bank. But a lot of customers are not patient."

Deji Omotayo, an electronics engineer who opened an account last year and saved N27, 500 for his children's school fees, said he is not patient because the fees have not been paid two months after they were due. "Every week, since September, dem dey say no money. The money wey I take a whole year save na im I no fit collect now. I want to use am to pay my children school fees na im dem no fit give me. No be say na loan I say make dem give me. Na my money."

Who takes the blame?

According to the official, the bank is short of funds to pay depositors because of the crisis that followed the Central Bank's audit of commercial banks about three months ago. Some analysts believe that the audit, which led to the sack of nine bank chiefs over non-performing loans, caused many banks to be sceptical about granting loans to customers. The official said Treasures Microfinance Bank's credit facilities at commercial banks have suffered because of the crisis, adding that "everybody is trying to play safe."

The official also said the bank had given loans to customers who did not pay back. "We had, before now, been giving out loans to our customers. A lot of them have not returned this money. So it is also affecting business. Once you don't have loans back, of course you know the ripple effects; depositors will not be able to get their funds too."

Another customer, Nasiru Fadipe-Kayode, said the bank's excuses are not acceptable. "They said all what the Central Bank did affected them and that people are owing them N32 million, what concerns us with that? They are not ready to pay us because there is no money. They can't even buy fuel for their generator," he said.

The official said the unrecovered loans now stand at about N20 million from the initial N200 million.

Officials of the Central Bank visited the bank's headquarters at Ojodu Berger, Lagos, about two weeks ago, for a "target audit", the official said. "The CBN has also been to our office. We had them for about three days. They told us to go and recapitalize. We are in the process of recapitaliation." He said the CBN gave the bank a "satisfactory rating" after the audit because "they saw our books and saw that we don't have any director-related loans. Instead, what we have is director-related liabilities."

No bailout for Microfinance banks

The bank asked the regulator for help when its officials came visiting. "We suggested that they should grant us bailout but they said they are not bailing out any microfinance bank. That we should go to our shareholders to raise our capital. They said we should raise our capital to nothing less than N150 million; which we are in the process of doing."

He complained that asking them to raise N150 million was unfair, "They gave N420 billion to bailout commercial banks. If they give N1 billion to all of us (Microfinance banks) to share, things will be better."

Customers bear the brunt

The bank has told its customers that they need to be patient if the bank is to survive. However, many customers have complained of difficulties arising from the inability to access their funds. Kemi Adewale, a business woman, said she and her husband opened an account at the bank to save for their daughter's school fees. They were able to save over N40, 000. Now, they cannot get the money when it is time to pay the fees. "My husband had to go and look for money elsewhere before my daughter could go back to school," she said.

Taju Ayo, who owns a furniture workshop, said he needs the N8000 he saved but cannot get it back.

However, it is not all customers who have had difficulty accessing their money. Sabdatu Abdul, a hairdresser, said, "When I heard of the rumours that they were not paying people, I called the boy that used to come and collect money from here (Account officer) and said I needed my money. He told me that he even withdrew my money that morning to give me. When he knew there was problem at the bank, he withdrew the money of all his customers and gave them. So I don't have problem with them."