Foreign investors dump sick banks
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- Category: Business and Economy
- Published on Monday, 30 August 2010 06:13
- Written by Nigerian Tribune
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THERE are strong indications that foreign financial institutions which had earlier indicated interest to invest in some of the sick banks in the country are backing out.
The eight sick banks which were rescued by the Central Bank of Nigeria (CBN) through the injection of a bailout fund of N620 billion are Oceanic Bank Plc, Intercontinental Bank Plc, Afribank Plc, FinBank Plc, Union Bank of Nigeria Plc, Spring Bank Plc, Bank PHB Plc and Equitorial Trust Bank.
Nigerian Tribune gathered that the latest development may not be unconnected with the uncertainties surrounding the sale and loss of value of the banks as the sale process drags on.
Specifically, some of the South African financial institutions that had expressed their bids in some of the banks are now looking at the banks that passed through the stress test conducted by the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) last year.
The prospective South African bidders, Nigerian Tribune gathered, include Standard Bank Group, FirstRand and Old Mutual Plc, all listed on the Johannesburg Stock Exchange (JSE).
Only at the weekend, one of the frontline foreign bidders, South Africa’s Standard Bank, which is interested in buying one of the banks, said the longer the process of selling the rescued banks lasted, the less attractive they could become.
The Group Chief Executive of Standard Bank, Jacko Maree, said it had expressed interest in more than one of the rescued banks, but the value of the banks was in danger of eroding over time.
“You have to get more careful the longer things go on. The rescued banks will be losing customers with their brands suffering while their costs stay the same,” he said.
Standard Bank, Africa’s largest bank, has a presence in Nigeria through the Stanbic IBTC. The interest of the South African financial institutions is largely attributed to the success made from the acquisition of majority interest in Stanbic-IBTC Plc, by the Standard Bank Group, some years ago. Stanbic-IBTC was taken over by Standard Bank in 2006, following the acquisition of majority stake, through a buyout arrangement which saw many shareholders of the bank trading off their shares at a premium over the value of the shares then, on the Nigerian Stock Exchange (NSE).
Maree reiterated that he would like to have another bank in Nigeria that is sound, stressing that the Nigerian market could be bigger than that of South Africa in no distant time.
“We could also look at one of the banks that didn’t need a bailout, but they are looking pricey again. Nigeria is a very important market for us and could one day be bigger than South Africa. For now we are growing organically and if an opportunity presents itself, we will take it,” he said.
It will also be recalled that another South African financial organisation, which had indicated interest in the sick banks is gradually backing out. FirstRand had in June this year suspended a planned sale of at least 500 million euros ($636 million) of bonds due to market volatility. The bank had planned to sell five-year bonds in Asia and Europe to fund expansions in Africa, particularly in Nigeria.
The sale process of the sick banks had been riddled with controversies. Only recently, the CBN governor, Mallam Lamido Sanusi, said that two foreign financial institutions and some local banks were involved in the bidding process in four of the eight banks, stating that the process would be completed this month.
This attracted sharp criticisms from the bank owners, culminating in court cases.
Specifically, the Proactive Shareholders Association of Nigeria (PSAN) asked a federal high court sitting in Abuja to stop the CBN and its governor, Mallam Sanusi, from selling the banks.
The plaintiff, through its counsel, Nnodu Okeke, was praying the court for an order of interlocutory injunction restraining the defendants by themselves, servants, agents or privies from selling, disposing of, and inviting bidders to buy any of the banks, pending the determination of the suit.
Okeke said the CBN must disclose the relevant laws that gave it the powers to sell the banks, adding that his organisation was in court to seek interpretations, based on the relevant provisions in the Banks and Other Financial Institutions Act (BOFIA) and Companies and Allied Matters Act (CAMA).
The shareholders were also praying the court to restrain the respondents from making statement or pronouncements capable of prejudicing the subject of the suit, pending its determination.
