Nigeria Deposit Insurance Corporation (NDIC) yesterday handed over former Gulf Bank and Eagle Bank to UBA PLC and Zenith Bank PLC under the purchase and assumption adopted for the resolution of the 14 banks that could not meet the N25 billion capital base requirements. Consequently, UBA assumed the N7.9 billion private sector deposits liabilities of Gulf Bank made up of about 38,500 accounts. This brings to five the number of banks UBA had assumed under the purchase and assumption model. The bank earlier assumed the private sector deposit of former Trade Bank, Metropolitan Bank, City Express Bank and African Express Bank.

Zenith Bank assumed the N890 million private and public sectors deposit liabilities of Eagle Bank? This is the first bank assumed by the bank under purchase and assumption model.

Under the purchase and assumption model a bank assumes the physical assets and the private sector deposit liabilities of a bank in liquidation. Under the model adopted by the Central Bank of Nigeria (CBN), the apex bank through promissory note issued to the assuming bank finances the difference between the value of the physical asset and the private sector deposit.

Speaking at the handover ceremony, Managing director/chief executive NDIC, Mr. Ganiyu Ogunleye explained why Zenith Bank is assuming both private sector and public sector deposit of Eagle Bank. He said that the value of the physical assets of the former bank covers the value of the two categories of deposit in the books of the bank.