WEDNESDAY, 02 MARCH 2011 00:00 BY ADE OGIDAN NEWS - NATIONAL

THE ongoing reforms in the nation’s banks may soon be dogged by a fresh litigation, as a group of shareholders has threatened to drag the Central Bank of Nigeria (CBN) to court, over alleged unilateral merger and acquisitions exercise of the financial institutions.
Also, the stakeholders, under the aegis of Independent Shareholders Association of Nigeria (ISAN) have concluded plans to formally petition President Goodluck Jonathan ahead of the legal suit, over the matter.
CBN governor, Sanusi Lamido Sanusi, recently disclosed in London, United Kingdom that 10 of the current 24 banks in the country would merge by end of this month, while industry sources indicated that the number of the financial institutions may eventually shrink to 15, under a merger/acquisition scheme already scripted by the apex bank.
Indeed, some of the “rescued banks” have unfolded plans to enter into negotiations with certain undisclosed investors, while a few Memorandum of Understanding (MOUs) had even been reached by a few of the banks, with prospective buyers.
But ISAN’s national co-ordinator, Sunny Nwosu, told The Guardian yesterday that CBN’s moves would be challenged in the court, “as they are statutorily illegal, due to non-consultations with shareholders, who are the owners of the banks”,
However, “before we file the suit, we would send a petition to President Goodluck Jonathan to see if he could call the CBN governor to order”.
Nwosu pointed out that already, “Access Bank Plc has been planned to buy over the bigger Intercontinental Bank Plc, through an MOU drafted and signed by two CBN lawyers, which has further thrown up immorality issues in the deal”.
According to him, “the plan to sell the banks’ shares to pre-determined investors, from our intelligence sources, had been concluded earlier, with intention to favour certain investors close to CBN leadership.
“The situational factor surrounding the plan would normally elicit concerns from all those that are interested in transparency and rule of law, as the moves being made so far by CBN have been shrouded in utmost secrecy.”
“All we’ve been hearing have been one-sided valuations of the banks’ assets by CBN appointed financial advisers, without reference to the shareholders.  We even had information that the banks are being made to pay for the services of those consultants.
“From all indications, the same CBN appointed managements of the so-called rescued banks have been declaring the banks as inadequately capitalized, without independent verifications by shareholders.  Where then is the transparency in the whole process?
Nwosu said that the recently established Assets Management Company of Nigeria (AMCON) has been surreptously engaged to discount the assets of some of these banks, “preparatory to selling their respective shares for peanuts”.
Besides, he stressed that the Securities and Exchange Commission (SEC) has been shying away from making positive intervention, which would ensure adherence to laid-down procedures in shares’ acquisition, under the present bids for the banks.
“Under the prevailing regulations, the shareholders should be allowed to source for suitable and compatible investors, where the need arises and we are not sure there is need for current shopping for investors by CBN, for the banks.
“Indeed, if there is any capital shortfall that requires the banks to recapitalise, both the Companies and Allied Matters Act (CAMA) and Banks and other Financial Institutions Act (BOFIA) require all shareholders to have the first right to recapitalise the banks.
“In doing this, the shareholders, at the emergency general meeting would mandate the board and management of the concerned bank to script the necessary moves and not the other way round where investors are being imposed on them by CBN.”
He added: “We find the role being played by AMCON as anomalous and could threaten the legal firmament of the entire financial system”, explaining that beside unsavory discounting of banks’ shares, “AMCON is not supposed to be a voting partner in the system as this is a direct and illegal move to reduce the powers of shareholders”.
Nwosu disclosed that plans to make Access Bank to buy over Intercontinental Bank is most unfortunate and would be resisted by shareholders.
“It is amusing that someone with small throat is being made to swallow a bigger object.  When the object has been swallowed, there would obviously be some braises on such small throat, “making philosophical reference to Access Bank’s bid for Intercontinental Bank.
He asked: “Why don’t you allow the bank, through the shareholders, to ‘toast’ each other before courting so that their respective compatibilities would be assessed.  Why does CBN want to destroy one bank or discount its shares to make it cheaper in the market in favour of pre-determined investors?
An official of Intercontinental Bank, who spoke on condition of anonymity, declined to confirm Access Bank’s bid for his bank, even as he affirmed that an MOU was earlier reached by both banks for an acquisition deal.
“We are still looking for investors.  The fact that we reached an MOU with Access Bank does not confirm that we have consented to the terms of a buyer.  The exercise is ongoing and we implore everybody to exercise patience till the deal has been consummated”, he said.
Currently, the CBN was still keeping mum over the number of foreign concerns interested in Nigerian banks. Already, South Africa’s FirstRand, has expressed interest in buying one of the nine rescued banks.
“We did register interest in that process. I’m not able to mention which bank, but we certainly registered our interest. We are looking at opportunities, especially given the reforms taking place driven by the Central Bank of Nigeria,” Sizwe Nxasana FirstRand’s Managing Director,  Sizwe Nxasama said recently.
The CBN had asked for potential bidders to register their interest in the troubled banks by mid-December to test the enthusiasm for acquisitions. A report by the Bank of America, Merrill Lynch published recently, revealed that a number of South African banks, have continued to express interest in Nigeria’s banking sector.
“A number of South African banks have expressed an interest in acquiring a stake, in one of the Nigerian banks. At a recent meeting with Johan Burger, Chief Operating Officer of the FirstRand Group, he described the situation in Nigeria at the moment as a once in a life time opportunity.”
The Head of Corporate Communications of CBN, Mohammed Abdullahi, recently confirmed in a media report that stated “discussions are going on already, expressions of interests have been received between the banks, the financial advisers we appointed for them, some organisations and individuals that have expressed interest,” without giving further details.
By the end of September, nine of the banks made provisions in excess of N2.2 trillion for loan losses. Potential investors are anxious to see how quickly an AMCON can soak up the bad debts and make the banks attractive.