Nigeria Content Online

Shareholders are
split over plans by the Central Bank (CBN) to sell some banks that were
bailed out last year. The banks are Intercontinental, Oceanic, Finbank,
Union Bank, Afribank, Bank PHB, and Spring.

After several
months of negotiation, Lamido Sanusi, the Central Bank governor, said
on CNBC Africa last week, that bids have been received for the affected
banks from two foreign institutions and some local banks.

Shareholders agree that the Central Bank has no right to sell the banks, but for different reasons.

Timothy Adesiyan,
president of the National Shareholders Solidarity Association, a
shareholder group, said the Central Bank is not selling the banks
because it has no right to do so. “It is recapitalisation, not sale,”
Mr. Adesiyan said.

“It is only when
the shareholders are not able to recapitalise that the CBN can
liquidate. All the Central Bank wants to do is give out some percentage
to core investors, who will come in subject to the approval of
shareholders.”

He said the CBN was
doing the right thing to ensure that the banks do not go under. When
told that the entrance of core investors would change the ownership
structure of the banks, he said it did not amount to outright sale.

“When Actis went
into UAC as core investor, of course the ownership structure changed
but the company was better for it. What we want to change is the
recklessness with which the former directors were managing the banks,”
he said.

Riding roughshod

Boniface Okezie,
president of the Progressive Shareholders Association, another
shareholder group, said the Central Bank’s insistence on handing the
banks over to a new group of owners was in the manner of riding
roughshod over other interests.

“We have not struck
any balance. The CBN governor’s original statement was that the press
was misquoting him; that he never said he would sell the banks. What we
are saying is that the management appointed by CBN cannot midwife the
handover of the banks. Up till now, the Central Bank has not told us
how much is required to recapitalise each bank,” he said.

Mr. Okezie said
there is already a caveat obtained from courts in Lagos, Abuja, and
Ibadan warning investors to beware of taking interest in any of the
banks. “Even the local banks that are showing interest, how many of
them are sound? How much dividend are they paying their shareholders
now for them to muster enough resources to take over the banks?”

He said the Asset
Management Corporation of Nigeria (AMCON) Bill was unfairly lopsided in
favour of the Central Bank to take over troubled banks.

Timely intervention

Godwin Anono,
chairman of Nigeria Professional Shareholders Association said the CBN
action was timely and was intended to save the banking industry from
imminent collapse. Mr. Anono claimed that many of the shareholders that
are fighting against the sale of the banks were merely fighting for
their own selfish interest.

“Go to the register
of members, how many shares do they actually own in these banks? They
are the ones who were conniving with the sacked management who were
mismanaging the banks. Let these banks be taken over,” he said.

“Shareholders fund, depositors funds are wiped out once CBN calls back its funds.”

Mohammed Abdullahi,
CBN head of corporate affairs, said even though new investors will
alter the ownership structure of the banks, the move was in the overall
interest of the institutions. “The CBN is not selling. We are merely
inviting new investors. If a bank issues IPO, (initial public offering)
does that mean it is selling the bank?”

Mr. Abdullahi said shareholders who were not satisfied with the CBN decision were free to seek legal redress.