Nigeria Content Online

The much awaited
sale of seven rescued banks is gradually unfolding, as the various
parties put finishing touches to the deal. While some prospective
financiers, particularly foreign investors, don’t want to stake their
funds, some local entities are making efforts to tidy up loose ends.

After injecting
N627 billion to resuscitate Intercontinental, Oceanic, Finbank, Union
Bank, Afribank, Bank PHB, and Spring banks last year, the Central
Bank’s plan is to allow new core investors that would entrench a new
culture of corporate governance, which the regulator said was lacking.

After several
months of negotiation, Lamido Sanusi, the Central Bank governor, said
recently that bids have been received for the affected banks from two
foreign institutions and some local banks. However, no foreign
institution has made its intention pubic. FirstRand, the South African
bank, regarded as one of the bidders, has said it is not bidding.

No foreign interest

Sam Moss,
spokesperson for Firstrand, said the institution is not interested in
any of the rescued banks, even though it has already registered its
presence in the country’s financial sector. JP Morgan, another foreign
financial institution, has also said it is not interested in any of the
rescued institutions.

“While we are not
purchasing a local bank, we do have relationship with some of them and
helping to build capacity,” said Tosin Adewuyi, JP Morgan’s senior
country officer in Nigeria.

However, the
International Finance Corporation (IFC), the investment arm of the
World Bank, may be backing the sale of the rescued banks, with the
recent signing of cooperation agreement with First City Monument Bank
(FCMB). The agreement, which comes with a $70 million investment in the
bank, also includes a clause for future partnership. A statement by the
bank says the areas of partnership include “acquisition finance of a
distressed bank.” FCMB is one of the bidders for Finbank.

IFC support

IFC’s country
manager for Nigeria, Solomon Adegbie-Quaynor, said, “IFC is committed
to supporting the full recovery of Nigeria’s banking system, and our
investment in First City Monument Bank reflects this strategy.”

“The CBN cannot
sell any bank because it does not have the power to sell what does not
belong to it. The only instrument is for the CBN to liquidate and
transfer to the Nigeria Deposit Insurance Corporation and these two
options will be too heavy considering the current condition of our
economy,” said Sunny Nwosu, coordinator of one of the numerous
shareholder groups recently.

Boniface Okezie,
another shareholders’ group coordinator, said pending court cases would
stall any attempt by the CBN to sell the banks. He said CBN has not
disclosed how much each of the banks require to recapitalise, which is
why the shareholders are in court to prevent the sale.

Mohammed Abdullahi,
CBN spokesperson, said so far, the banks were making appreciable
progress in reaching agreement with potential core investors.

“Individual banks
can tell you how far they have gone. They are talking with people, and
it has reached advanced stage,” he said.

He, however, said the banks are in a better position to talk on how far they have gone with the various bidders.