Perhaps, it will take sustained resistance and pulling of all available strings for existing major shareholders in some of the troubled banks to retain their investments in the banks. Last week was remarkable in their struggle. For instance, some of the investors of Union Bank of Nigeria, UBN, which is one of the banks affected by Lamido Sanusi’s controversial reform policy, were said to have mobilised against a planned forceful sale of the bank to a faceless group of investors.
As governor of the Central Bank of Nigeria, CBN, Sanusi appears resolved to sell off the big bank without recourse to the shareholders. “The CBN is trying to hijack the process of recapitalisation, which is supposed to be deliberated upon at the bank’s annual general meeting, AGM, or extraordinary general meeting, EGM, before a final decision is taken”, said an aggrieved shareholder.
The renewed move by the investors in UBN may have been prompted by an ongoing arrangement where one of the northern state governors is said to have taken steps to acquire majority stake in the bank. That did not anger the investors enough until it became clear to them that the governor was actually fronting for a more formidable interest group. The rumble in UBN may escalate in the weeks to come as one of the CBN appointed top management staff is said to be mopping up the bank’s shares, apparently in readiness for the new ownership structure. The top executive is said to have taken a loan of about $2 billion from Oceanic Bank but was not listed among the debtors of the bank, which was published by the CBN.
A similar rumble is brewing in Platinum Habib Bank, BankPHB. Industry sources believe that one of the contents of the famed Sanusi agenda could be the reacquisition of Habib Bank, one of the legacy banks of Bank PHB, originally owned by Shehu Musa Yar’Adua, late elder brother to the President and MKO Abiola, the late acclaimed winner of the June 12, 1993, presidential election. It is believed that there are behind the scene moves to sell the bank alongside other troubled ones,
Last week, the CBN said it was considering injection of funds by shareholders; bringing in new investors; nationalisation; or outright liquidation of the troubled banks as recapitalisation options. That came several weeks after CBN appointed management of the banks submitted their recapitalisation plans to the apex bank for approval but which the CBN said it was still studying.
Of all the recapitalisation options, the CBN tends to be favourably disposed to either nationalisation or selling the banks to new investors. Justifiably, financial experts are worried about the nationalisation option. It is considered to be retrogressive and at best an obsolete economic policy. The country has a long history of mismanagement of state-owned enterprises. On the other hand, Sanusi’s quest for new investors — local and foreign is considered by his critics as a major component of an opaque agenda for the banking system.
At the beginning of his regime at the CBN last year, Sanusi canvassed vigorously for foreign investors in the affected banks. He also made a strong case for nationalisation. This, financial experts believe, he intends to achieve by converting the N620 billion intervention fund to some of the affected banks to government eq equities. It is also believed that Deutsche Bank, Stanbic IBTC and Chapelhill, the three financial advisers to the nine troubled banks, appointed by the CBN are most likely to recommend recapitalisation options that will best serve the purpose of the regulator.
At the World Bank meeting held in Istanbul, Turkey, last year, Mansur Muhtar, finance minister, said government was considering nationalisation of some of the banks it considered to be under-performing. Surprisingly, Sanusi, who was also at the meeting denied government’s plan to takeover the banks. But that sounded much like a reversal of his position. In an interview he granted a foreign medium shortly after he was appointed CBN governor, Sanusi had expressed government’s desire to take over the banks.
The plot to sell the banks is very much at variance with injection of capital, which investors in most of the banks have already planned to do as it was done in the case of Equitorial Trust Bank, ETB, where Mike Adenuga, business mogul and chairman of the bank was allowed to inject $150 million into the bank when CBN concluded its ‘special audit’ and concluded that the bank was insolvent.
Taiwo Odeyemi, a shareholder of UBN, observed that due process is lacking in the entire process. “Shareholders of ETB were allowed to inject additional capital, but the same opportunity was not given to other banks. That is discriminatory. Sanusi’s interference in the banks was, therefore, done in bad faith”, he argued. At the last count, two South African banks were said to have offered to buy some of the troubled banks. There are also local banks that were not affected b by the crisis in the sector but which are showing interest in buying some of the troubled banks but many directors of these banks are said to be uncomfortable with the plan. Rather than take over the troubled banks, some of the fairly stable banks are rather making plans to raise about $30 billion from the bond market to strengthen their positions. The banks include Diamond Bank, Guaranty Trust Bank, Skye Bank, United Bank for Africa, UBA, and the troubled UBN. One of the directors of UBA was said to have strongly opposed the idea of buying one of the troubled banks on the grounds that most of the sacked directors of the bank were his friends; and that it would amount to a moral burden on him “to take over their business in a controversial circumstance”. In all these, Sanusi does not seem to be bothered. Not even by legal actions taken by shareholders of the banks. Last year, UBN, Oceanic Bank, Afribank and Intercontinental Bank investors instituted law suits against the CBN and Sanusi challenging the takeover of the banks. The suit filed by Afribank investors at the federal high court, Lagos is seeking N500 billion as general and aggravated damages. Similarly, shareholders of UBN are asking for N500 billion in damages. The shareholders faulted the appointment of directors for the banks and injection of funds into the bank without reference to the shareholders. Perhaps, the real battle for the soul of the banking industry is yet to begin.
Sanusi: Appears resolved to sell off ‘troubled’ banks
UBN: Investors mobilise against forceful sale
Muhtar: Announces government’s plan to nationalise banks
Adenuga: Injecte Injected $150 million into ETB
Odeyemi: Accuses Sanusi’s interference as lacking transparency Page 1 | 2 | 3 | 4 | 5 |
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