7 February 2011

Nigeria: Banks' Boards Meet Over New Investors

Lagos — In a bid to finalize and ratify the decisions of their managements on the new core investors, board of directors of the five rescued banks would be meeting this week to take final decision and signing of Memorandum of Understanding next week.

The rescued banks are: Spring Bank, Union Bank, Intercontinental Bank, Oceanic Bank, Fin Bank, BankPHB and Afribank. CBN had bailed out the banks from total collapse in August 2009 with N650 billion.

Intercontinental Bank's board met last Friday in Lagos on the ratification of the new investor, while the bank's management is expected to sign the MoU with the new investor this week.

The board of Union Bank, it was reliably gathered, would be meeting in Lagos on Wednesday and one of the vital issues on the agenda is the ratification of the selected core investor by the bank's management.

It was gathered that the Union Bank management had concluded discussions with the selected investor and is also satisfied with the proposal to inject the bank with fresh fund

It would be recalled that the Group Managing Director Funke Osibodu had said that the management of the bank selected a core investor as well as a preferred bidder and that their names would be made public in a few weeks time.

She said discussions with the core investor is still ongoing and that a Memorandum of Understanding which would lead to signing Deed of agreement would be signed in a few days, adding that part of the conditions provided by the apex bank, the Central Bank of Nigeria (CBN) must be met before the parties reach conclusion.

"As you are all aware, one of the conditions for core investor to come in was bringing the bank to zero level and that is what AMCON is doing right now, buying the bad loans and so far we have collected N239 billion under the first phase. We are still discussing and reconciling. If we still have bad loans we will still take more of it."

She said once the negatives are cleared, a new investor would come in, adding that as at now the percentage of equities to be acquired by the core investor is yet to be determined but that the core investor would be the largest shareholder in the bank.

The bank, it was gathered would be signing the MoU this week once the directors agreed with the recommendation of the management.

Daily Trust also learnt yesterday night that the board of directors of Fin bank, Oceanic and Afribank would be meeting this week on the same issue and that MoU could be signed this week or early next week.

The CBN Director of Banking Supervision, Sam Oni had last week said four of the nine troubled banks would seal Memorandum of Understanding with potential core investors last week, leading to their recapitalization.

"Two other troubled banks would also seal their MoU with investors in the next two weeks," he said yesterday in Abuja after the Bankers Committee met to discuss critical issues in the banking sector.

Oni said: "I can confirm to you that by the end of this week four of those banks would have completed their details in terms of MoU that would lead to the recapitalization of those banks.

"In a fortnight, additional two would have also reached the stage to complete their MoU.

In other words, six banks that were considered important in terms of their systemic weakness would have completed arrangement towards resolving their recapitalization. "To us that is a positive development. I can confirm to you that there is no longer systemic risk in the banking sector.

Copyright © 2011 Daily Trust. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.