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The eight rescued
banks have started reaching out to its minority shareholders to support
the recapitalisaiton plans of the Central Bank of Nigeria (CBN).

The board and
management of Finbank met with various shareholders groups in Lagos
yesterday to forge a common ground. In the last few weeks, similar
meetings were held by Intercontinental Bank and Oceanic Bank. The bank
promised shareholders that they would have the final say on those that
would be approved as new investors in the banks.

Suzanne Iroche,
Group Managing Director and Chief Executive of Finbank, said there was
need to recapitalise the bank as quickly as possible. “If CBN takes
away the forbearances without adequate capital and liquidity,
immediately, we are failed institutions and we can’t afford that,” she
said. “An institution that operates negative capital is an institution
which loses value over time.”

State of the banks

She added that the
bank cannot continue to operate with negative capital as 88 per cent of
its loans are currently not performing. “We have taken deposits and
shareholders fund up to N88 billion which is yielding nothing for us
but that is costing us money,” she said. “We have to resolve this as
quickly as possible.” Mrs Iroche also explained that the bank’s toxic
assets is about N156 billion, while insider related loans totals about
N25 billion, out of which only N2.7 billion has been repaid since
August. She subsequently expressed the need to support the
recapitalisation plans of the Central Bank so that the institutions can
get new lease of life.

Shareholders who
spoke said the intervention by the CBN was timely as it saved the banks
from the brink. The Chairman of Onitsha Zone Shareholders’ Association,
Goodluck Akpore, said the intervention by the CBN is what has kept the
banks afloat. “What CBN has done is to save my investment and that is
why we pray for Lamido Sanusi,” he said.

Minority interest

Nona Awoh, another
shareholder, said the banks should make sure that the interest of
minority shareholders are taken into consideration. Mr Awoh said beyond
taking equity positions, the incoming investors must be made to make
long term commitments to the banks. “The new core investors should take
long term positions by also taking debenture,” he said. “It is
important for the board to reach an arrangement that would be in the
interest of the bank.”

Emmanuel Ikwe, the Chairman of Coordinating Committee of Zonal
Shareholders Association, said the shareholders would resist any
underhand negotiation that would hand over the banks to persons of
questionable character. “If you want us to support you, we need to know
those who are going to be the core investors,” he said. “You have to
find out as a board the credibility of these people. CBN has taken a
decision that is good.” Sunny Nwosu, the National Coordinator,
Independent Shareholders Association of Nigeria, however said only the
initial shareholders have a right to determine those that will
recapitalise the banks. “The Central Bank said it has guaranteed
depositors. So we say give our banks to us since you have guaranteed
depositors let us recapitalise it because we are risk bearers,” he
said, adding that the way the CBN was going about the recapitalisation
plans was in the manner of taking institutions away from those who have
toiled to build them over the years.