WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2010-06-09 Time: 09:00:03 Posted By: News Poster
By Kingsley Ighomwenghian
It is exactly 22 days to the June 30, 2010 deadline set for Wema Bank and Unity Bank, two institutions previously with heavy public sector shareholding, and which following the audit exercise commissioned by the Central Bank of Nigeria (CBN) to check the blood pressure of Nigerian banks, were given till this month end to raise their capital base to an acceptable level.
As a result of the exercise conducted by examiners from the CBN and Nigeria Deposit Insurance Corporation (NDIC), nine banks including Wema, were found to have failed the test in the three broad areas – liquidity, capital adequacy and corporate governance. Unity Bank was found wanting on account of capital inadequacy. While the executive management of eight of the banks were fired and replaced by the CBN, those of Wema and Unity were spared.
Wema’s followed the change in ownership with the acquisition of majority of the 40 per cent shares owned by Odu’a Investment Limited by SW-8 Investment Limited at the same time Sanusi Lamido Sanusi assumed office as CBN Governor exactly a year ago.
As part of efforts to meet the set deadline, Unity Bank, on Friday, June 4, 2010, started its bid to raise N23.9 billion by way of rights to existing shareholders, as approved by shareholders at its last Annual General Meeting (AGM) in Abuja. The bank held a completion board meeting for the offer of 23.928 billion ordinary shares of 50 kobo each at N1 per share, to shareholders on the basis of three new shares for every two shares held as at April 27, 2010.
The offer is to enable the bank meet the 10 per cent capital adequacy ratio minimum required by the Central Bank of Nigeria (CBN), while ensuring long-term sustainability of the current operations and business expansion strategy.
Available data shows that 50 per cent or N11.66 billion of the fresh capital will be used to boost working capital/project finance; while 25 per cent or N5.8 billion will be ploughed into branch network expansion. Another 10 per cent or N2.3 billion each will be invested for technology enhancement and human capital development; while the remaining five per cent or N1.16 billion will be used for re-branding.
The offer, management explained, will help dilute public sector shareholding from 70 per cent to a maximum of 25 per cent, which is nonetheless still more than the regulatory maximum of 10 per cent.
Wema Bank had, over a year ago, given vent to the CBN directive resulting in the emergence of SW-8 Investment comprising a group of eight investors, as majority shareholder, bringing along fresh capital, management and ensuring corporate governance.
SW8, set up by a group of experienced professionals and successful businessmen from Southwestern Nigeria, as a special purpose vehicle, emerged successful bidder among five institutions that initially indicated interest in the competitive bid exercise.
Why Unity Bank Needs New Funds
The rights circular quoted Prof. Akin Mabokunje, Chairman of Unity Bank, as saying in his letter to shareholders that the confidence of the board and management that in the absence of unforeseen circumstances, the bank will continue to exist as a going concern and record significant growth and improvement in its operations over the coming years.
He said the bank’s competitive strategy aims at redefining performance to impact positively on services to be delivered to stakeholders, while improving its liquidity and profitability position.
“Strategic alliances in equity, product development and channels of distribution will be entered into to create value for the group and extend its capacity to service chosen markets,” Mabogunje said.
He added that Unity Bank will also seek to enjoy competitive advantage by leveraging on cost leadership, value chain banking and continuous strategic branch expansion while consolidating on its market share.
“Overall, we aim to grow the bank in five years to a level that will put it in the league of top five banks in terms of balance sheet size, income and return on equity. The bank tends to comply with the new CBN strategy in universal banking,” he said.
Explaining further, Falalu Bello, chief executive of Unity Bank said: “We have merged successfully, we have integrated successfully, the bank is running profitable now and there are so many things going on that would help us to attain the 10 per cent capital adequacy ratio besides the issue of this right issue.
“For instance, some two months back, we have advertised sale of a lot of our assets that we inherited from the nine banks that we merged with these banks and the sale has been successful. Today we have sold over N4 billion worth of our assets and that has brought in money, which is equally going to our profit, which would help us in meeting the 10 per cent capital adequacy ratio.
“I am very optimistic that by God’s grace, by the end of next month we would be there.”
Commenting on the recent policy of the Central Bank of Nigeria (CBN) on categorisation of banks, Falalu said: “I am very happy about the categorisation of banks by the central bank. All that I have fought for even in the days of Prof. Chukwuma Soludo is that it was wrong to say all banks should be of the same size. Some banks can decide to be a regional bank or a microfinance bank that would operate only in one local government; one can decide to operate within Nigeria and outside Nigeria. I believe that is what I argued consistently that the regulator should recognise. For me, I say congratulation to Sanusi for adopting what is considered to be right.”
Reactions to the Unity Bank offer has been varied, with some market watchers wondering how they board intend to reduce government holding in the bank from 70 to 25 per cent with the rights issue. This, the argument goes arises from the fact that the bank is telling shareholders: “insist on your rights” such that if this is done the status quo would still obtain – post offer. The only option, according to another source, is for the bank to have had an arrangement with some of the public sector shareholders, mostly northern Nigerian state governments to decline. This would be complemented by arrangements to get other shareholders, especially portfolio managers and individual high net worth investors to mop up the shares there from.
There are those who believe that the offer would succeed despite the lingering liquidity bottlenecks, given the fact that before any board and management would come by way of rights, they must have received the buy-in of major investors.
Wema Bank
The bank recently released its recapitalisation plan to investors through the Nigerian Stock Exchange (NSE), in which it announced plans to raise fresh N49 billion before the deadline. Rather than by offering for subscription or rights issue, the board and management of Wema Bank announced plans for special placing of N34 billion to identified foreign investors, and another N15 billion to select strategic local investors.
The planned capital raising exercise is coming three months after the first quarter target the management set for itself late last year.
This plan for fresh capital is to be complemented by internal recovery efforts that would yield an estimated N10 billion between the first five months of this year. The bank has assured that it “is quite close in achieving the set target.”
Besides this, the bank also hopes to leverage on recent initiatives of the CBN to re-inject liquidity into this system including discounting “some provisioned assets with the Asset Management Corporation of Nigeria (AMCON) where at least N10 billion would be recovered; (while another) N2 billion of provisioned loans will be refinanced under the N200 billion SME Refinancing Fund established by the CBN and being managed by the Bank of Industry.”
The bank also plans to opt for a regional banking licence, in line with the CBN’s proposed new licensing regime, while phasing out universal banking owing to series of abuses by operators.
There are those who believe that in one year, the new management team of Wema Bank led by Segun Oloketuyi, who until his assumption of office was an executive director at Skye Bank, has exhibited its capability by drastically improving on the bank’s health condition.
According to the audited result for the nine months to December 31, 2009, Wema Bank reported a drop in its loss attributable to shareholders, which stood at N7.53 billion, improving by N12.925 billion or 63.18 per cent over the previous year’s N20.455 billion.
The un-audited result for the 2010 first quarter to March 31, 2010 further proved this, as despite the flat growth in gross earnings from N8.077 billion in the corresponding period of 2009 to N8.433 billion, profit before tax stood at N795 million, as against the previous N2.029 billion loss. Despite the N95 million or 395.83 per cent growth in taxation, profit after attributable to shareholders stood at N676 million, compared with previous net loss of N2.053 billion
The balance sheet information provided showed that fixed assets value rose slightly to N15.13 billion from N14.284 billion in the comparative period of 2009, while the loans and advances portfolio improved marginally from N30.464 billion to N36.14 billion. Cash and bank balances for the first quarter fell to N67.554 billion from N71.695 billion; other debit balances went up to N51.942 billion from N34.49 billion; deposit base jumped to N113.916 billion, indicating increased customer confidence, when compared with the previous N94.526 billion. The was also a slight improvement in assets value, which though still largely negative, dropped to N45.045 billion, as against N45.837 billion previous.
Understanding Quantum of Work Done
The 2009 audited and first quarter results, is believed to be the success of the turnaround maintenance job done on Wema Bank by the new management, which took over on June 10, 2009. The new executives are: Oloketuyi, Nurudeen Fagbenro, (inherited from the previous management as bridge between the old and the new in the management); Ademola Adebise and Taiwo Adeniji.
The above result is against the background of the disclosure by Oloketuyi, who on assumption of office, regretted that “the previous challenges faced by the bank (which) have no doubt impacted adversely on its business as evidenced by the weak financial performance reported in its published accounts.” One of such, he explained, is the huge N116.355 billion non-performing loans and advances, which have already been provisioned in the accounts, leading to a depletion of capital base.
“However, in this challenge lies our greatest opportunity to recapitalise the bank through the bold initiatives that the board and management have taken to recover these non-performing loans. We are pleased by the result achieved so far. A significant amount of recoveries have been made post September 30, 2009 balance sheet date. These recoveries will improve the shareholders funds when our accounts are published for the year ending December 31, 2009,” Oloketuyi said in a statement last year.
The latest results are also seen as the outcome of the bank’s implementation of a three-phase turnaround programme to restore the bank as a leading financial institution in the country.
Conclusion
Gbadebo Olatokunbo, a shareholder, believes both Wema and Unity Bank should not have problems recapitalising ordinarily, because of their “special zonal background.” This is especially true, he says, of Unity Bank, which has more presence across the country, because it is the outcome of a merger of nine banks, besides their sound board and management.
“It shall be a disgrace to our corporate image,” he added, if we fail to support them at a time like this. There are several prudent Nigerians, both local and international who would ordinary show interest, including politicians and high net worth that the CBN banking reforms drove from the money market and are now hell bent on a comeback,” he added.
Original date published: 8 June 2010
Source: http://allafrica.com/stories/201006090662.html?viewall=1