[size=16pt]Sick banks for sale month end –Sanusi •CBN’s plan ’ll fail –Stakeholders [/size]


Written by Odidison Omankhanlen and Olatunde Sanni, with Agency Reports
Tuesday, 17 August 2010

BARRING any unforeseen circumstance, the eight sick banks which were bailed out with N620 billion by the Central Bank of Nigeria (CBN) last year, aftermath of the audit report, will be handed over to new owners by the end of the month.

The banks include Oceanic Bank International, Intercontinental Bank, Afribank, FinBank and Bank PHB. Others are Spring Bank, Union Bank and Equitorial Trust Bank.

Central Bank governor, Mallam Lamido Sanusi, who disclosed this during an interview on CNBC Africa Television on Monday, noted that the apex bank had received bids for the affected banks from two foreign institutions and several local banks, but refused to name the financial institutions involved in the bidding process.

Sanusi pointed out that the appointed advisers had already completed the verification exercise for four of the banks, stressing that, that of the remaining four banks would be completed by month end.

“Two foreign institutions were involved in the bidding process, as well as several local banks and private equity firms in partnership with foreign banks. The advisers have finished analysing bids already received for four of the banks. We expect the bids for the others to have been completed by the end of this month,” Sanusi said.

Meanwhile, some shareholder groups have said the process cannot be complete without their involvement.

In a telephone interview with the Nigerian Tribune, the legal adviser to Proactive Shareholders Association of Nigeria (PSAN), Mr Nnodu Okeke, said the apex bank’s decision on the bank was only a threat , insisting that without shareholders’ consent, it would be an exercise in futility.

According to Okeke, the CBN must be able to disclose the relevant laws that gave it the powers to sell the banks, adding that his organisation was already in court to seek interpretations based on the relevant provisions in the Banks and Other Financial Institutions Act (BOFIA) and Companies and Allied Companies Act (CAMA).

Also speaking with the Nigerian Tribune, a shareholder activist, Mr. Ganiyu Lawal, said the apex bank should stop making pronouncement without the consent of the shareholders.

According to Lawal, while the shareholders appreciated the regular dialogue with the apex bank, it was important that the CBN governor finalised agreement with them before rushing to the press.

It will be recalled that the CBN governor, last month, met with shareholders’ groups, including some other stakeholders, where he allayed fears over a unilateral action in the sale of the banks, stressing that the CBN would not sell the banks as it was not the business of CBN to do that.

The CBN, he said, only recommended some reputable financial advisers, who were working with the boards and managements of the banks to source and negotiate with any of such investors that could create some value for the affected banks.

He emphasised that the process of repackaging the banks was being driven by the boards of the affected banks, some of which had held discussions with the strategic partners without direct involvement of the CBN.

The governor reassured stakeholders that the shareholders would definitely play an important role in the recapitalisation exercise and that the process of giving value to their shares was already assured with the coming on board, very soon, of the Assets Management Corporation Of Nigeria, (AMCON).

However, he cautioned that should the ongoing process to recapitalise the affected banks be frustrated, the CBN would have no option but to go for liquidation as provided by the existing legal framework.

Nigerian Tribune Newspaper

What is going on?! This is the first thing crossed my mind when I read this news.

I hope this move will not affect badly the market, it is already shaking. What about our money there, should we take out.

Many questions and fears are shocking my head. We deserve more clarifications and assurance from Mr. Sanusi. When he made his first surprising move against the administrations of those banks, most of pple supported hims hoping it is a correction movement, but now there is no excuse for any other surprises

Why is Union Bank among these banks for God's sake? Union Bank was for years competing effectively with First Bank in all ramifications. Does it mean Union Bank has finally moved from high tower to deep well. . .from grace to grass? OMOKEMESI

It is the right of shareholders to decide whether to sell, go into partnerships or recapitalize their banks. It is not the business of the CBN as we have insisted on several times before now. The right of shareholders to recapitalize their banks does not affect the right of the CBN to regulate these banks. It is simply over zealousness for the CBN to determine who owns the banks that it seeks to regulate. It compromises the CBN if it seeks to bring in the investors to invest in the banks that it will regulate. Let the CBN seek to strengthen its regulations while the banks seek to strengthen their capital and operations to meet regulatory standards. 
The CBN has already over-reached itself by appointing financial advisers for banks it did not own and even going ahead to negotiate with investors on behalf of the banks. These taken-over banks are quoted on a recognised and respectable stock exchange, the Nigerian Stock Exchange (NSE) not a casino as Sanusi will want us to believe.
The shareholders of these institutions are very much alive and willing to recapitalize their banks. The CBN has done its job by stabilizing these institutions; which have not only been stabilized, but they have returned to profitability. What the CBN should do next is hand over these institutions back to their hareholders at their next annual general meeting (AGM).
The CBN can give them the timeframe to recapitalize like it has done with Wema and Unity Bank.