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Banks shareholders
remain unsure of what becomes of their shares after the Asset
Management Corporation (AMCON) assumed the banks’ liabilities. Some of
them claim that they have not been called by the rescued banks or the
corporation on the corporation workings and procedure. But the
Corporation has assured the shareholders that they will not be wiped
out “AMCON has not spoken to any shareholders, to let us know what will
happen to shares and other issues related to it,” said Boniface Okezie,
a shareholder and leader, Progressive Shareholders Association.

“On what grounds is
AMCON taking over? Until they tell us (shareholders) that this is what
they are doing and that this is the mode they want to follow, they have
still left shareholders out. These are the things that brought
backwardness some years ago, the government taking over or managing
private institutions. The banks themselves have not come to us to say
this is how AMCON will affect us or not. If the corporation takes over
and sits on the board of banks, that is nationalization. It will not
augur well with such institutions,” Mr. Okezie added.

The banks
management are also not spared by the Central Bank. Mohammed Abdullahi,
the bank’s spokesperson said the banks are responsible for updating
their shareholders on issues regarding their shares. “The banks are to
talk to their shareholders directly, and they are talking to them
already. The shareholders are part of the discussion that the banks are
having with other people, including prospective investors, so it’s not
the Central Bank that would do that” Mr. Abdullahi disclosed.

While some of the
rescued banks claimed they have been talking with their shareholders on
the proposed workings of AMCON, others said they were not doing that
yet. “We have been talking to shareholders,” a source at Spring Bank
said. “We have already had about two meetings with them and have
explained to them about AMCON, their shares and other issues, like
recovered funds and others regarding the process”.

A source at
Intercontinental Bank said the bank would talk to its shareholders on
AMCON, when it is time to do so. “You know all these things cannot just
happen or take place like that,” he said. “Recapitalisation and the
corporation are in stages. When we get to that stage, the shareholders
must be carried along. We would definitely update them when its time,”
he added.

“Right now, AMCON
is just putting together their structures but they have said they are
not in the business to take over any bank. The want to help banks work
on their capital level so that new investors can invest in the banks.
It is certain that when it comes to the issue of recapitalisation,
shareholders would definitely be carried along” a source at Oceanic
Bank claimed.

Shareholders will benefit

Meanwhile, some
finance analysts said AMCON’s intervention is a good development
especially as it concerns shareholders’ fund. Muyiwa Oni, a research
analyst at Stanbic IBTC said the corporation will help in the valuation
of the rescued banks’ shares.

“I’ll say that the
corporation is positive for shareholders of the distressed banks,” Mr.
Oni.”The shareholders’ funds of the distressed banks are negative so we
cannot say that the corporation will put shareholders funds at risk. As
at March 2010, the total shareholders’ funds of all the distressed
banks stood at negative N1.458 trillion. On the contrary it will
preserve some value for the current shareholders.

“The negative
shareholders’ funds are a shortcoming for the shareholders and so they
will need to inject more funds if they want to maintain their holdings.
Since AMCON is bringing in capital, it will have to own a stake. This
will dilute the holdings of the shareholders significantly because of
the amount that it will invest. I think what is important to note is
that the shareholders stand to lose everything if the corporation does
not step in” he added.

David Adonri, a
stockbroker, similarly said that the corporation will benefit the
shareholders. “Without AMCON, all shareholders will lose their
investments. The intervention of corporation is a blessing because this
means their shares will still have value. It intends to cooperate with
the Central Bank to look for other investors and bring fresh funds.
When this come, the banks will come alive, and then the shareholders
wealth will now finally be secured.” “AMCON will be silent” It’s duty
is to douse nationalization concerns; its inclination is not to be a
voting shareholder in banks but protecting its investments and
participating actively with others to recapitalize the banks.

Mustafa Chike-Obi, the AMCON chief said it is not the intention of AMCON to wipe out existing shareholders.

“The truth of the
matter is that for the shareholders, the banks have negative equity but
it is not the intent of the corporation or the government, in this
case, to wipe out existing shareholders so what we will do is that we
would buy the non-performing loans first, then we would recapitalize
the banks to zero,” Mr. Chike-Obi said last week in an interview in
Abuja.

“In that process of
recapitalisation, we would have a split between AMCON and the existing
shareholders. Then we as a group would find an acquisition partner and
an M and A (Merger and Acquisition) partner, then a negotiation with
that partner would determine the final shareholding of the existing
shareholders, AMCON, and the new shareholders”.

The corporation
chief gave the assurance that shareholders will never be forced to sell
their shares in this process. “They may sell at the market if they
think the market is high enough or they can stay and be partners with
AMCON in the new recapitalised bank but they will never be forced to
sell and nobody will force them out”.

“Right now, the
rescued banks have negative capital. If they go into liquidation or
NDIC, they will be wiped out. The whole purpose of this exercise is
that we want to create some value for these rescued banks so that the
shareholders are not wiped out. We hope that by buying the NPL’s and
recapitalising these banks, there will be some value for existing
shareholders”.

Chike-Obi also said the corporation will be a silent shareholder. We
expect that negotiations between the new acquiring partners and the
banks will mostly be conducted by existing shareholders and the new
ones. AMCON is just there to help the process. We will observe and
protect our investment.”