5 foreign, 6 local banks scramble for sick bank

Written by Odidison Omankhanlen, Lagos
Monday, 12 July 2010

THE race to acquire the troubled banks in the country has assumed a frightening and unhealthy dimension, as both international and local banks are scrambling and jostling to be part of the exercise.

As of the weekend, the Nigerian Tribune gathered that five foreign financial institutions and six local banks were in the queue to acquire some of the banks.

The bidders’ renewed interest might not be unconnected with the apex bank’s effort to clean the balance sheets of the banks through the Asset Management Company (AMC); impressive first quarter financials posted by the affected banks; ongoing holistic reforms in the sector, and re-assuring message from the Minister of Finance, Mr Olusegun Aganga, that local banks should join the acquisition race.

Nigerian Tribune gathered that while the foreign banks had indicated preferred interest in Intercontinental Bank, Oceanic Bank and Union Bank, local banks, including Fidelity Bank and Ecobank, wanted Afribank.

Governor, Central Bank of Nigeria (CBN), Mallam Lamido Sanusi, had maintained that securing the future of the above-named banks was his priority, as they were the most systematically important.

A competent source at the CBN, who pleaded anonymity, told the Nigerian Tribune that they were taking their time to carry out a detail scrutiny of the documents submitted by the bidders, in order not to sell the banks to wrong organisations.

Barring any unforeseen circumstance, the source said the apex bank would soon hand over five of the 10 banks to new owners earlier than scheduled, following sustained pressures from the bidders.

The CBN governor had said the banks would be handed over to new owners by September or October.

Standard Bank Group Limited, FirstRand Limited and Old Mutual Plc, three of the largest financial institutions in South Africa, in January, said they might be interested in buying stakes in Nigerian banks, while local banks like Fidelity Bank Plc, Ecobank Nigeria, First Bank and Skye Bank were also said to be in the race.

The planned sale of the banks has divided the shareholders’ group in the country.

While some see the plan as part of the current reforms in the industry, others are opposed to the move.

Meanwhile, an Abuja high court will, today, be hearing a suit filed by the Proactive Shareholders Association of Nigeria (PSAN) against the apex bank, to determine the latter’s competence to sell any of the banks.

In a telephone interview, the legal adviser to the association, Mr Nnodi Okeke, said his clients were in court to stop the sale process as CBN could not sell what it did not own.

He said before any bank was sold, shareholders should be consulted, adding that the interest of the shareholders had not been taken into consideration by the CBN.

“In fact, this is against reasoning. How can you sell what you don’t own? CBN is never the owner of these banks. The directors of the affected banks and their shareholders should be allowed to recapitalise their banks. If the banks are now declaring profit, what is the yardstick for selling them?” He queried.

However, the chairman of Nigeria Professional Shareholders Association, Godwin Anono, enjoined the apex bank to go ahead with the sale, advising stakeholders to avoid litigation but join hands with the CBN governor in his effort at revamping the sector.

He noted that the sale of the banks would be beneficial to the shareholders in the long run, as the banks would be handed over to organisations that could better manage them.

As a boost to the proposed sale plan, the National Assembly, last week, sent the harmonised Asset Management Company of Nigeria (AMCON) bill to President Goodluck Jonathan for assent.

When signed, it is expected to give birth to Asset Management Company (AMC), which will soak up bad debts in the banking sector, thereby cleaning the banks’ balance sheets and enable them to resume lending to other sectors of the economy.

http://www.tribune.com.ng/index.php/front-page-news/8101-5-foreign-6-local-banks-scramble-for-sick-banks