CBN: Shareholders Now to Recapitalise Rescued BanksBy Emele Onu, 07.16.2010
The Central Bank of Nigeria (CBN) has enhanced the participation of shareholders in the recapitalisation of rescued banks by bestowing on them the power to midwife the process.
They would also take the final decision on who invests in the financial institutions.
With this development, the apex bank has heeded to the wishes of the shareholders, who have been clamouring that they be allowed to recapitalise the banks.
Addressing stakeholders of the rescued banks in Abuja yesterday, CBN Governor Sanusi Lamido Sanusi, according to a statement made available to THISDAY, said the apex bank would not usurp the rights of shareholders.
He assured them that the final decision on recapitalisation rests with them.
Present at the meeting which was chaired by Sanusi were the boards of directors of the rescued banks, their management as well as shareholders. The meeting was the second in the series of dialogue initiated by the CBN to ensure effective collaboration in the process.
Sanusi was also said to have reassured them that having secured the depositors? fund with the reform programme, the focus of the CBN now is to salvage some value for the shareholders.
He made it clear that the CBN would not sell the banks, as it is not the business of the banking watchdog to do that. The CBN, according to Sanusi, only recommended some reputable financial advisers who are working with the board and management of the banks to source and negotiate with any of such investors.
He emphasised that the process of repackaging the banks is being driven by their board, some of which have held discussions with strategic partners, without direct involvement of the CBN.
?The Governor reassured the stakeholders that the shareholders would definitely play an important role in the recapitalisation exercise and that the process of giving value to their shares is already assured with the coming on board very soon of the Assets Management Corporation Of Nigeria, (AMCON),? the CBN statement read.
?On the issue of on-going litigations against the CBN, it was noted that a few individuals took the action without the consent of the seven zonal shareholders associations and that these few individuals who went to court only did so for personal reasons, as such individuals do not represent the opinion of the shareholders," it added.
The CBN, however, said that if the on-going process to recapitalise the affected banks is not successful, the apex bank would have no other option than to go for liquidation as provided by the existing legal framework.
Sanusi noted that liquidation and nationalisation are not desired options for the banks, stating that he is convinced that fresh injection of capital through strategic partnership remains the best approach.
The stakeholders, according to the statement, commended the CBN for reaching out to the shareholders and urged that the two options of liquidation and nationalisation should not be considered.
They also recommended that the CBN should go for the option that protects both the depositors and the shareholders and promised to consult with other shareholders to withdraw all court cases. Besides, they advised that the new management put in place by the CBN should be communicating with the shareholders regularly.
The CBN had some months ago engaged the boards of the banks and their major shareholders to a similar meeting, during which it urged them to support the recapitalisation programme or risk losing their investments.
The CBN governor has said repeatedly that the recapitalisation programme is in the interest of local investors who stand to regain their lost investments in the organisations after their recapitalisation, the recovery of reasonable portion of bad loans and the return of the banks to profitability.
AMCON set to take off in about a fortnight, after presidential assent to the bill, it is believed that all issues surrounding the recapitalisation of the banks would be resolved.
The CBN intends to clear $10 billion (about N1.5trillion) of bad loans from the banking system by the end of this year, in support of the recapitalised banks.
Sanusi said recently that bids on the banks would be released by September or October this year, adding that four international banks were among the likely bidders.
He said bids on the banks are to close by the end of July.
Sanusi recently said he is optimistic about the rescued banks? recapitalisation. ?Foreign investment in Nigeria is expected to rise as investors bet on rising oil prices, increased Nigerian oil production, and improved regulation of the banking sector," he stated.
The rescued banks are those the monetary authority found in ?grave financial situation? following the joint examination of the CBN and the Nigeria Deposit Insurance Corporation (NDIC) and the release of the findings on August 14 and October 2 last year. The banks are Intercontinental Bank, Afribank, Oceanic Bank, Finbank, Union Bank, Bank PHB, Spring Bank and ETB.
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