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: 2011-03-21 Time: 14:00:02 Posted By: News Poster
By Rotimi Durojaiye
The Central Bank of Nigeria (CBN) has rescued nine banks in a N620 billion bail-out in 2009 after auditors deemed them to be so weakly capitalised to the extent that they posed a risk to the whole financial system. The apex bank has since sought new investors to recapitalise them. The rescued banks have been holding talks with potential investors in recent months so as to meet the CBN deadline. Group Business Editor, ROTIMI DUROJAIYE, writes on the inability of some of the troubled banks to find ‘suitor’ in the current financial ‘marriages’.
The anticipated smooth transactions and transition between the eight sick banks and their new owners by industry regulators and respective managements may, after all turn out to be a mirage as minority shareholders of the affected banks are threatening massive resistance.
Top executives of the CBN, including the Governor, Lamido Sanusi, the Deputy Governor in charge of Financial System Stability (FSS), Dr Kingsley Moghalu, and the Director of Banking Supervision, Samuel Oni, had said at various fora that the affected eight banks would get new owners in a couple of weeks, confirming that some had signed Memoranda of Understanding (MoU).
The eight banks are part of the 10 banks that failed the joint stress test conducted on all the 24 banks operating in the country by the CBN and the Nigerian Deposit Insurance Corporation (NDIC) in 2009.
They are Union Bank, Intercontinental Bank, FinBank and Spring Bank. Others are Oceanic Bank, Afribank and Bank PHB.
It was gathered that minority shareholders, under several groupings, have been spending the greater part of their time planning strategy for their next line of action against the backdrop of plans by the banking watchdog to go ahead with the sale of the affected banks.
Sources at one of the meetings said the minority shareholders were peeved that despite the court cases instituted by some of their members against the CBN, it was still moving ahead with the sale process.
They pointed out that at the various meetings between them and the CBN-appointed management of the affected banks last year, they had insisted on due process, sincerity and transparency in the sale process, regretting that none of their demands had been complied with.
Apparently confirming the decisions of the minority shareholders, National Coordinator, Proactive Shareholders Association of Nigeria (PROSAN), Oderinde Taiwo, said that they would never accept any sale of the affected banks without due process, stressing that they would use every available means at their disposal to stall the process.
According to him, the minority shareholders had insisted at the various meetings with the regulators and managements of the affected banks that the NDIC and independent directors’ reports must be followed, regretting that their demands were being jettisoned.
“Contrary to the decisions reached at the meetings with the management of these banks that they should show sincerity and transparency, CBN and the management have failed to do so. We also agreed that the NDIC findings and independent directors’ reports, especially, minority shareholders’ representatives should be followed to the letter before the sale. To our surprise, these have not been complied with. Therefore, we will not accept any kangaroo sale of our banks,” he warned.
While insisting that the sale of the banks should not be shrouded in secrecy, he added that some of the touted acquirers of the affected banks did not have such financial and management capabilities, querying why a bank, which was published as highly indebted to one of the troubled banks, was now to buy over the same bank.
Shareholders against planned sale of Bank PHB to foreigners
Five aggrieved shareholders of Bank PHB on Tuesday filed a petition before a Federal High Court in Lagos to challenge the propriety of the move by the CBN to sell their bank to Habib Bank Limited of Pakistan.
They want the court to halt the process, as it would occasion substantial injustice to them and their shares.
The shareholders, Shofolahan Sunday, Ajani Tunde Oluwole, Anyanwu Chukwuma Leonard, Orji Azubuike Sunday and Akpala Tea Ojore, are urging Justice Charles Archibong to restrain the CBN and other respondents in the matter from going ahead with the plan to alienate any of Bank PHB’s investments and other assets, including but not limited to the bank’s business, operations and affairs to Habib Bank Limited of Pakistan, or any other such entity.
The shareholders also listed Bank PHB, its Managing Director, Cyril Chukwumah, Ayaba Ayo Joseph, Olusegun Bolaji, Alwan Hassan, Adbul-Lateef Kolawole Abiola and Professor Pat Utomi as respondents.
Others are Zakir Mahmood, Nauman Dar, Michael Ajukwu, Brig-Gen Lawal Ja’afar Isa (retd), Vincent Okwechime, Ifeyinwa Osime, Habib Bank Limited of Pakistan and the CBN.
When the matter came up, lawyers to the shareholders, Onyebuchi Aniakor and Nnamdi Dimgba, moved an ex-parte motion to stop the planned sale.
Justice Archibong, however, ordered that it would be tidier for the respondents to be put on notice.
While ordering that the directors of Bank PHB be served with the processes in the suit at the bank’s head office, the court also granted the shareholders the right to serve the Pakistani-based bank with the processes out of jurisdiction and at its head office, 20 Habib Bank Plaza, Karachi, Pakistan, through a recognised courier company.
The court thereafter fixed March 24 for hearing.
In the petition, the shareholders averred that Bank PHB directors, under the active direction of the CBN and its governor, Lamido Sanusi, have been running the affairs of the bank in an illegal and oppressive manner to the prejudice of the shareholders.
They alleged that the Chukwumah-led management of the bank had been conducting the affairs of Bank PHB in a manner that is in disregard of the interests of the shareholders of the bank.
The petitioners recalled that on October 2, 2009, in the absence of any lawful cause, the CBN and its governor purported to have removed the managing and executive directors of the bank appointed by the members, and imposed on the bank their appointees.
They added that the CBN alleged claim that the bank was in a grave situation, also claimed to have injected N70 billion into the bank upon the terms and conditions determined solely by the CBN and its governor.
The shareholders stressed that contrary to the provisions of the Memorandum and Articles of Association of Bank PHB, the CBN-imposed management of the bank are now seeking to convert the said N70 billion into an equity shareholding in the bank in favour of the CBN and its nominees.
The shareholders are therefore urging the court to compel the CBN, Sanusi, and their imposed-management to jointly render account of their dealings in the affairs of the bank ever since they took over the bank.
No buyers for Spring Bank, Finbank
There are strong indications that Spring Bank Plc and Finbank Plc may have been sidelined by core investors, who did not find their books to be impressive.
In reaction to this apparent disappointment, the banks are seriously considering regional banking status to remain in business.
It was gathered that the inability of the two banks to find ‘suitor’ in the current financial ‘marriages’ in the industry was due to unimpressive financials of the two financial institutions that were rescued by the CBN.
The core investors, a source said, were very enthusiastic in sealing a deal with the two banks but began to withdraw when their consultants flown in from United Kingdom expressed dissatisfaction with their books.
It was revealed that if not for unsatisfactory records of Spring Bank, a London-based investment group owned by Nigerians would have injected huge amount of money to turn around the bank.
Spring Bank has been severally plagued by a recapitalisation bug that had consistently made its history very unhealthy right from time.
The bank has gone into more stints of mergers and acquisition than all the banks in the industry today. It was gathered that the investment group that backpedalled on its bid to buy Spring Bank has already finalised talks with another rescued bank and may eventually acquire between 55 per cent and 65 per cent stake in the bank.
On its own part, Finbank, which has discussed with a good number of intending investors was said to have similar case with Spring Bank.
But apart from unimpressive financial records, it was alleged that the executive management team of the bank and former owners of the bank are working at cross- purposes.
The big shareholders of Finbank had alleged that the executive management of the bank wanted to sell the bank to another local bank in order to retain their positions after the recapitalisation.
CBN not involved in mergers, acquisitions
The CBN on its part said that it is not involved in banks’ fresh mergers and acquisitions plans.
The Head, CBN Corporate Affairs, Muhammed Abdullahi, said that the deposit money banks were handling the mergers and acquisitions processes.
He said, “The banks are in charge of the whole process of the mergers and acquisitions. The CBN has no hands in it at all. It is not the job of the apex bank to arrange mergers and acquisitions among banks. The CBN will not step in the process. When the mergers are through, the banks will announce themselves.”
The CBN spokesman however confirmed that merger talks were going on among the banks, noting that the results would soon be released.
The banks are meeting and talking, and the results will be announced by the banks as soon as the process is over,” he said.
Some of the healthy banks have been holding talks with the management of the rescued banks in order to acquire them.
Although none of the banks has announced plans to merge or acquire any of the rescued banks, sources close to the banks have outlined possible mergers and acquisitions deals in the sector.
It was gathered that Bank PHB Plc, for instance, might be acquired by HBL Pakistan, which is the largest bank in Pakistan. Also, Capital Alliance Group has been linked with Union Bank of Nigeria, while Access Bank is in talks with Intercontinental Bank Plc.
There are also reports that First Bank of Nigeria Plc may acquire Oceanic Bank International Plc, while Vine Capital Partners is also holding talks with Finbank Plc.
Reuters had also said that Skye Bank was interested in buying one or two rescued banks.
According to the Managing Director, Sotice Investment Company Limited, Adedayo Toluwase, mergers and acquisitions will have a positive effect on the ability of the banks to carry out their primary functions of financial intermediation.
He added, “Mergers and acquisitions in the banking sector will improve competitiveness and efficiency of the borrowing and lending operations of the Nigerian banking industry.
“However, the CBN should monitor the banks to avoid unnecessary competition that will lead to future problems.”
Vine Capital may inject N60b into Afribank
Vine Capital Partners, a private equity firm and the preferred major investor into Afribank Plc, is proposing an investment of N60 billion ($400 million) into the bank starting with an initial investment of N45 billion ($300 million) and additional capital of N15 billion ($100 million).
It was learnt that the capital for investment would be raised internationally and locally.
Vine Capital Partners established a Special Purpose Vehicle (SPV) to acquire the majority stake in Afribank.
One banker said: “This is a big fortune for Afribank. But the fact that the investment appetite still exists is a very good sign. It shows that the Nigerian banking industry has tremendous potential as far as many investors are concerned. The banking sector reform has paved the way for this deal.”
The private equity firm, besides the capital injection plan, also outlined a turn-around strategy for the bank, which will begin to deliver future success by the end of 2013.
The development, analysts said, is expected to bring Afribank back to its pride of place, which it lost some years ago, and help it attain the status of an international financial player as envisaged by Vine Capital Partners.
According to a document where the synopses of transactions were made to the regulatory authorities, Vine Capital has standing commitment from some international investors like Emerging Capital Partners (ECP) and Parish Capital among others.
ECP is said to be the first private equity group to raise more than $1.8 billion for investment in companies across the African continent.
Parish Capital Advisors is a principal investment firm specialising in funds investments, secondary investments, and direct investments focused on small and niche opportunities. It typically seeks to partner in direct investments with existing or new fund managers with sector expertise.
Besides, the equity is believed to have other technical partners for the successful consummation of the transactions.
Indeed, the equity firm, owned by some Nigerians in Diaspora, is looking at a pro-rata ownership stake of 55 per cent and a minimum investment size of N500 million in the bank.
Vine Capital outlined details of how it intends to safeguard the bank’s assets to secure winning ways and become leaders in the industry.
They listed industry leading corporate governance, enhanced risk management profile, high quality asset pursuit and enhanced competitive positioning in wholesale banking.
They also intend to leverage on superior customer service, simple and innovative products, competitive product pricing, and more responsiveness to customer needs. They say operational excellence will however be anchored on cost leadership, efficient systems, industrialised processes and streamlined product offering.
The equity firm intends to achieve them through simplifying the organisation, consistent financial and non-financial performance measurement, single focus of management and strategic capital allocation to maximise performance and returns.
By their estimation, returns in the form of cash dividends will commence from the third year after consummation and takeover of the bank expected to be around July.
Afribank may have commenced preparatory actions to ensuring smooth and seamless transition as the bank has stopped payment of upfront of allowances since the beginning of this year; a move sources said is aimed at conserving funds for the bank.
Analysts say these deals are certainly not good news for the employees, since layoffs will be expected as the merged entities consolidate their operations.
In consummating the deals, the acquirers relied on old business alliances, financial muscle in the industry, and ownership of preference shares to scale the hurdles in a keenly competitive bidding.
CBN had, following recent shocks in the financial industry, set in motion the mergers and acquisitions discussions with the floating of the Asset Management Corporation of Nigeria (AMCON) to deal with banks’ huge bad debts.
However, some industry stakeholders are pessimistic about the likely outcome of the negotiations, which they said had dragged on for too long. There have also been concerns that with the exit of some of the prospective buyers, some of the banks may not get the core investors envisaged by the CBN.
But after AMCON bought about N2.2 trillion of the bad assets of 21 eligible banks last year in exchange for about N1 trillion consideration bonds, thereby injecting fresh liquidity into the banks and cleaning up their books, there have been fresh optimism that many of the banks will be recapitalised before June this year.
New ownership formula out soon
However, following the almost concluded mergers and acquisition deals between the rescued banks and core investors, a formula for establishing the percentage ownership of all the parties to the recapitalisation deals is to be approved this week.
Investigation revealed that the ownership structure would be determined by weighing a bank’s total non-performing loans against the total amount it required to recapitalise to zero level.
According to findings, the formula will also give the existing shareholders of rescued banks some value to fall back on unlike if the banks were to be liquidated.
A source close to the deals said that the formula, which had been endorsed by the CBN and the Ministry of Finance, might be approved at the AMCON’s board meeting scheduled to hold this week.
“We have seen what the ownership formula looks like. I think everyone has a good deal, based on the level of negative capital of the banks and their non-performing loans,” the source said.
It was gathered that, for existing shareholders, their percentage ownership would be determined by dividing the value of a bank’s non-performing loans by the total amount required to recapitalise it to zero level.
The percentage ownership of AMCON in all the cases, it was learnt, would also be arrived at by dividing the value of recapitalisation (difference between NPL value and total requirement) by the total capital requirement.
A source close to the Oceanic Bank International Plc’s recapitalisation deal disclosed that, on the basis of the ownership formula, the new investors might own 80 per cent of the bank, while AMCON and the existing shareholders might end up with 10 per cent each.
The source said that it was a fair deal that provided something for existing shareholders, who would have had nothing as a result of the amount of negative capital the bank had.
In the case of Wema Bank Plc, AMCON might not own any shares because the bank would need no additional capital after selling about N17billion NPLs to the corporation.
For Intercontinental Bank Plc, investigation revealed that Access Bank Plc had almost concluded plans to inject about N60 billion into the bank.
It was gathered that the fund, when injected, would raise Intercontinental Bank’s capital adequacy ratio to about 15 per cent.
This is after AMCON must have recapitalised it to zero level. The same, according to experts, is expected of other banks’ recapitalisation deals.
However, findings showed that Intercontinental Bank might operate as an independent entity for up to 18 months, until all arrangements were finalised.
When contacted, the Managing Director, AMCON, Mustafa Chike-Obi, said, “Of course, there will be a formula for determining the percentage ownership of the parties involved in the recapitalisation of banks and that is being worked on. However, I can’t say that a particular formula has been prepared now. Once it is approved, it will be made known.”
The Head, CBN Corporate Affairs, Muhammed Abdullahi, said he was not aware of an ownership formula for now, but added: “the banks and their financial advisers should know about that.”
Eleven international, nine national banks to emerge from new reforms
There are strong indications that 11 international, nine national and four regional banks may emerge after the final phase of the ongoing banking sector reforms.
At the end of the day, Zenith Bank Plc, Guaranty Trust Bank Plc, United Bank for Africa Plc, First Bank of Nigeria Plc and Access Bank Plc will opt for the international banking licence.
Other banks that will operate in the international banking category are Diamond Bank Plc, Fidelity Bank Plc, Skye Bank Plc, First City Monument Bank Plc, Bank PHB Plc and Union Bank of Nigeria Plc.
Investigations also revealed that Stanbic IBTC Bank Plc, Standard Chartered Bank Limited, Sterling Bank Plc, Unity Bank Plc, Citi Bank Limited, Afribank Plc, Oceanic Bank International Plc, Intercontinental Bank Plc and Ecobank Nigeria Plc would emerge as national banks.
The remaining banks – Wema Bank Plc, Spring Bank Plc, Finbank Plc and Equitorial Trust Bank Limited – are to settle for regional licences.
The CBN on September 8, 2010 repealed the universal banking model as part of its strategic measures to reform the Nigerian banking sector and directed banks to divest from non-banking business.
Consequently, the apex bank introduced a revised banking model that required banks to apply for new licences under a new regime that would focus on banks’ areas of strength.
The banks are expected to maintain a minimum share capital of N10 billion, N25 billion and N50 billion as regional, national and international banks respectively.
Twelve of the banks had announced their plans as regards their preferred licences in the new regime. But the others, especially the rescued banks, have yet to announce their decisions.
Those that have taken a decision are GTBank, UBA, First Bank, Access Bank, Diamond Bank and Skye Bank.
Others are FCMB, Fidelity Bank, Wema Bank, Unity Bank, Sterling Bank and Oceanic Bank.
A survey carried out on the remaining 12 banks revealed their preferred licences in the new regime.
UBA had said in a statement last year that it would relinquish its universal banking licence that would allow it offer multiple services and become an international bank to be known as UBA Plc.
The statement said, “The holding company will house UBA Plc, UBA Capital and UBA Africa, a new unit that will coordinate the bank’s subsidiaries in 18 other African countries. UBA’s insurance, asset management, stockbroking and investment-banking units will now be under UBA Capital.”
Also, Skye Bank had said it would apply for a commercial banking licence that would have an international scope to enable it to continue to operate both within the country and internationally through its international subsidiaries.
The Head, Corporate Affairs, Ecobank, Ola Akinnola, confirmed that the bank would opt for a national banking licence.
The apex bank had said, while announcing the planned review of universal banking, that in the new banking regime, licences would be issued for commercial, microfinance, regional, national, international, mortgage and investment banking businesses.
Original date published: 19 March 2011
Source: http://allafrica.com/stories/201103210568.html?viewall=1