(Business in Cameroon) - Our sources at the Central African Banking Commission (COBAC), say, the constable of the banking sector took the decision based on the state of affairs at the National Financial Credit Bank but its publication has been blocked by Cameroonian authorities. The decision was taken in Malabo, Equatorial Guinea on November 23, 2012, on the sidelines of events to mark the 40th anniversary of the Bank of Central African States (BEAC).

A source that refused to be named, deposited 7 million francs CFA at one of the bank’s branches in Yaoundé, and was given a rendez-vous in one week when requested for a withdrawal of two million francs CFA. But, he later called a sister commercial bank and was asked to come for the same amount in 5 hours.

As of now uneasy calm reigns within COBAC as other managers not of Cameroonian origin as the Deputy Secretary General, Eric Roland Belibi, want the decision to be published, and are mounting pressure on its president, the Governor of BEAC, Lucas AbagaNchama to ensure that the information is made public, our source revealed.

Reached on Phone, the Board chair of NFC and billionaire, Zachariah AwangaAyangwo, admits that his bank was going to be placed under provisional administration but “measures have been taken to avoid the situation.” “We were asked to look for a technical partner, that we have already done, I can assure that there is nothing to fear as we are doing everything to avoid the situation,” he added. He admitted that the Minister of Finance is doing all in his power to avoid this.

The Minister of Finance, AlamineOusmaneMey, was unavailable for a comment but a senior staff of the Ministry said, “a statement about such a situation is the prerogative of the Minister.” He explained that issues about banking are very sensitive and any information could cause panic in the country. To him, if the Minister took such a decision to do everything in his power to block the publication of this decision, it is to avoid the First Investment Financial Assistance (FIFA) saga. “You cannot imagine what we went through with this case,” he added.

Despite an apparent excess of liquidity, banks in the region, especially those formed on the basis of national savings, with one or two exceptions, are far from stable.

According to figures contained in a report on the economic situation of Cameroon by the Ministry of Finance (MINIFI), NFC Bank holds 79.3 billion francs CFA in bank deposits of the 2604.1 billion in 13 banks as at June 30, 2012 up from 57 billion as at June 20, 2011.

To COBAC, this type of decision (to be placed under provisional administration) can “prevent systemic risk, because the failure of a credit institution may jeopardize other banks by a contagious effect,” says a statement on the organisation’s website. Before now several Cameroonian banks have been in this situation, some have survived: Commercial Bank Cameroon (CBC), Amity Bank, Union Bank Cameroon (UBC) as well as several microfinance institutions built after the model of COFINEST Cameroun.

Consequences

If made public, COBAC will appoint a provisional administrator. As an immediate consequences, the Board of Directors and the Executive Board become subordinates. The provisional administrator, who answers to COBAC, a subsidiary of BEAC, has the broadest powers to manage the business. This interim administration would last at least 6 months, renewable.

Hence, there is fear that before the decision is made public, managers of the bank could authorize “unorthodox financial transactions to recover the investments of shareholders of the bank which would eventually penalize clients of the bank as their savings could be used for the purpose,” our source at BEAC warned.

JV