AMCON Insists It Can Sell Mainstream Bank To Willing Buyers

Mustapha Chike ObiThe planned sale of Mainstream Bank by the Asset Management Company of Nigeria (AMCON) has continued to generate controversy, with AMCON saying that it reserves the right to sell the bank to willing buyers.

The shareholders of the defunct Afribank, now Mainstreet Bank, had placed a cavear emptor on AMCON’s invitation for expression of interest for the acquisition of AMCON’S shares in Mainstreet Bank Limited.

The Managing Director of the AMCON, Mr Mustapha Chike Obi, on Tuesday reacted to the publication, insisting that the supposed shareholders had no right to write such publication as AMCON was the sole owner of the financial institution.

“There is only one share holder of Mainstream Bank and that is AMCON. The old Afribank has been grounded legally by the court, so Afribank no longer exists. When you say shareholders of Mainstream Bank it is only AMCON.

He said that AMCON took over the bank when it provided 450 billion Naira to ensure that the depositors with Afribank did not lose their funds.

“Anyone willing to give back that money to AMCON can have the bank back,” Mr Chike Obi said, stressing the need for AMCON to recoup its funds.

He said that the decisions of the acclaimed shareholders over the planned sales was wrong as the owners of the bank had destroyed the banks and decided to have the bank back at no cost.

Chike-Obi, who was our guest on our business programme business morning on Tuesday, insisted that there was no case in court that prevents AMCON from selling Mainstreet Bank limited.

According to him the sale of the bank had been muted for over a year now and everything has been done transparently.

He confirmed that 25 investors had responded to the expression of interest request so far and the process was still ongoing.

AMCON Appoints Citigroup, Vetiva To Manage Sale Of Troubled Banks

The Asset Management Company of Nigeria (AMCON), which holds non-performing assets of troubled banks, said it had named Citigroup and Africa-focused investment bank Vetiva Capital to manage the sale of its shares in one nationalised bank.

AMCON nationalised Afribank, Spring Bank and Bank PHB in 2011 when they failed to find new investors before a recapitalisation deadline. It then recapitalised them and changed their names to Mainstreet, Enterprise Bank and Keystone Bank, respectively.

AMCON Chief Executive Mustapha Chike-Obi said in an interview on Thursday it planned to sell 100 percent of Enterprise Bank through Citigroup and Vetiva but would organise the sale of the other two lenders at a later date.

He had previously said the advisers would solicit expressions of interest from prospective investors and decide on the best way to proceed.

AMCON said it was on track with its timeline to complete the sale of all three lenders by the third quarter of next year.

AMCON may list nationalised banks

The Asset Management Company of Nigeria (AMCON) on Tuesday said it may list three banks that were nationalised as part of a bailout in 2009, instead of selling them to rivals, as it seeks to determine fair value for the banks.

The Chief Executive Officer of the Asset Management Company of Nigeria (AMCON), Mustapha Chike-Obi

Mustapha Chike-Obi, the chief executive of AMCON, said the AMCON will need to find financial advisers before finalising its decision on whether to list directly or sell to competitors.

“AMCON is appointing an adviser that will evaluate and determine the value of the banks, evaluate all the options available to AMCON,” he said.

“We expect our eventual adviser to consider this (listing) among other options,” Chike-Obi said. He said in April that all three rescued banks were now profitable.

Previously, AMCON said that more than 20 firms — banks and private equity investors — had expressed interest in acquiring the nationalised lenders, but AMCON is keen to have them valued before starting any negotiations.

It may opt to take them public if it can get a better deal.

The Central Bank of Nigeria (CBN) nationalised three banks changed their names to Mainstreet Bank from Afribank; Enterprise Bank from Spring Bank; Keystone Bank from Bank PHB, for failing to find new investors before a recapitalisation deadline.

The CBN then injected N620 billion into nine banks in 2009, judging that they were dangerously undercapitalised.

Internal fraud in Banks responsible for collapse of Capital market – CBN deputy governor

The deputy governor, financial systems stability, of the Central Bank of Nigeria (CBN), Kingsley Moghalu on Wednesday said that lending to non-priority sectors and to operators of the capital market by commercial banks in Nigeria were key factors responsible for the near-collapse of the nation’s capital market in 2009.

The deputy governor, financial systems stability, of the Central Bank of Nigeria (CBN), Kingsley Moghalu

Mr. Moghalu disclosed this while he was making a submission at the resumed hearing of the House of Representatives ad-hoc committee investigating the collapse of the capital market.

He said that the nation’s financial system would have collapsed if the CBN had not exercised its responsibility as the lender of last resort as he replied to questions by members of the ad-hoc committee on who authorised the CBN to nationalise the bank.

The CBN in November 2008, injected N602 billion into eight banks that were almost running aground.

Giving a breakdown of how some of the banks manipulated their share prices, Mr. Moghalu said that “Afribank PLC via a share buy-back arrangement manipulated its share price when it went to the stock market in 2007.”

He claimed the bank through the services of three stock broking firms bought 66 per cent of the bank’s offer using fictious name of 1,258 subscribers and at the end of the offer, they will announce that their offer was over-subscribed.

He also revealed that Finbank in August 2006 conspired with three companies incorporated by the bank to buy N2.8billion worth of its own shares between August 2006 and August 2008, adding that the bank will claim the offer was over-subscribed.

Another bank accused of the fraudulent shares buy-back was Intercontinental bank. The CBN deputy governor said that the bank bought 3.4million units of its share which constitute 29 per cent of the bank’s share value on the stock market between September 2007 and December 2009.

He gave a breakdown of the non-performing loans by the eight liquidated banks as below:

  • Bank PHB – 40.86%
  • Oceanic Bank – 44.35%
  • Afribank – 47.0%
  • Finbank – 47.45%
  • Intercontinental bank – 48%
  • Equatorial Trust Bank (ETB) – 57%
  • Wema bank – 77%
  • Spring Bank – 85%

He described the banks as ‘net-takers’ that are only surviving exchanges from the inter-bank rate markets’. He added that between 2008 and 2009 “the banks were also on ‘life-supports’, surviving on sub-ventures from the CBN such as the Expanded Discount Window and Standing lending facility.

Bank Consolidation

A member of the committee, Bimbo Daramola, raised the issue on how the bank consolidation of N25 billion forced on the bank’s was the reason why the banks were involved in the round-tripping of share buy-back in a bid to rush and make the N25 billion.

Mr. Moghalu noted that it was just eight banks that were culpable of the wrong-doing and not all the banks that sort to carry-out the consolidation. “Without the consolidation, the global financial crises would have wiped out all the Nigerians bank” he said.

He added that the knock-on effects of the global financial crisis and the capital flight of $15 billion also contributed to the crash of the capital market.

Another Member of the ad-hoc committe, Representative Usman Mohammed, noted that despite the huge investment of funds into the banks, the lending rate to the real is still poor. Responding to the observation, Mr Moghalu stated that “the most important obstacle and challenge to the nation’s real sector is the absence and lack of power and not interest rate”, adding that “loans to the agriculture sector has risen from 1% to 3% in the last one year.”

He also assured the hearing that with the ongoing reforms across the nation’s economic sector, the banks will start granting more loans to the sector once the reforms kick-off.

He further explained that banks lending has increased drastically due to AMCON’s purchase of all bad loans. “Just about 5% of banks loans are now bad loans” he stated.

Former Afribank director asks court to quash money laundry charges against him

An ex-director with the former Afribank Nigeria Plc (now Mainstreet bank), Chinedu Onyia on Wednesday asked a Federal High Court in Lagos to quash criminal charges preferred against him by the Economic and Financial Crimes Commission (EFCC).

Mr Onyia, in a motion against the charge, insisted that there is nothing on the face of the charge upon which he could stand trial, adding that the EFCC failed to provide credible material to link him with the commission of the alleged crime.

The former bank director is standing trial alongside former Managing Director of Afribank, Sebastian Adigwe, a stockbroker, Peter Ololo and his company, Falcon Securities Limited, former Chairman of Afribank, Osa Osunde and two other directors of the bank – Henry Arogundade and Isa Zailani.

The accused persons are standing trial over alleged abuse of office, banking malpractices and laundering of N55 billion.

According to the charges, Mr Adigwe was said to have conspired with the bank directors to grant several loan without adequate security.

Some of the companies that allegedly benefited from the “reckless” loan included Larix Company Limited, Suletical Nigeria Limited, Broworks Nigeria Limited, Alsmiths Nigeria Limited, Rehoboth Assets Limited and Falcon Securities Limited.

The accused were said to have failed to take all reasonable steps to ensure that the books of accounts of Afribank as at May 31, 2009, gave a true and fair view of the state of affairs of the bank as required by Sections 24 (1), 24 (2) of the Banks and Other Financial Institutions Act. Cap. B3, Laws of the Federation by understating the loan portfolio of the bank.

Specifically, Mr Adigwe had allegedly perpetrated shares fraud by creating a misleading appearance of active trading in the shares of Afribank on the Nigeria Stock Exchange.

He was accused of doing that by approving N2 billion credit facilities to Alsmiths Nigeria Limited to purchase large volume of Afribank’s shares, an offence contrary to Section 105 (1) (a) of the Investment and Securities Act, 2007 and punishable under Section 115 (a) of the same Act.

When the matter came up on Wednesday before Justice John Tsoho, Mr Onyia’s lawyer, Kola Obafemi urged the court to quash the charge against his client, and also discountenance the additional proof of evidence filed by the EFCC.

Mr Obafemi said that the EFCC in the charge alleged that Mr Onyia granted reckless credit facilities, but that the proof of evidence attached by the commission to the charge showed clearly that all facilities were duly authorized.

On the additional proof of evidence, Mr Obafemi argued that it was unfair on the part of the EFCC to file additional evidence against his client after he had pleaded to the charge, and urged the court to take a strong stand on it; otherwise, there would be no end to the filing of papers.

Reacting to the submission by the counsel to the former bank director, the EFCC’s lawyer, K.U.K Ekwueme urged the court to dismiss the two applications filed by Mr Onyia, adding that the man had in his statement to the anti-graft agency, admitted signing on to the approval of credit facilities in the case.

Former Afribank boss accuses EFCC of selective prosecution

The Former Managing Director of Afribank (now Mainstreet bank), Sebastian Adigwe has accused the Economic and Financial Crimes Commission (EFCC) of indulging in selective prosecution by deliberately dropping ‘a star’ accused person from the criminal charge currently pending against him at the Federal High Court in Lagos.

Mr. Adigwe, who spoke through his lawyer, Anthony Idigbe at the continued hearing of the matter on Tuesday, stressed that the EFCC suddenly dropped one Jubril Isah from the charge without any reason, and that the said Isah was the Executive Director in charge of Finance at the bank at the time the alleged crime was committed.

Mr. Idigbe stated that eighty percent of the counts against the former bank boss in the charge were alleged to have been committed in collaboration with the said Isah, who was suddenly dropped from the matter.

While absolving his client of any crime, Mr. Idigbe noted that as Managing Director, Mr. Adigwe was employed by the bank to take business risk, and that he cannot be criminally liable for any fallout of the business judgment he made on behalf of the bank.

Mr.  Idigbe pointed out that the EFCC was unable to show anywhere in the counts where Mr. Adigwe benefited fraudulently from the transactions upon which he is now being tried.

While insisting that the charge disclosed no prima facie evidence against his client, Mr. Idigbe urged the court to quash the charge against the former Afribank bank boss as presently framed.

Responding, EFCC’s lawyer, K.U.K Ekwueme said the allegation of selective justice by the defendants was completely diversionary, and that the dropping of Jubril Isah does not make the case incompetent.

Ekwueme stressed that the arguments of the defence was a collateral attack on the prosecutorial powers granted the prosecution by the Constitution, as it was at liberty to drop charges against any accused person.

Mr. Adigwe is standing trial alongside others over alleged abuse of office, banking malpractices and money laundering to the tune of N55 billion.

Other accused persons are a stockbroker, Peter Ololo and his company, Falcon Securities Limited; former Chairman of Afribank, Osa Osunde and four directors of the bank – Chinedu Onyia, Henry Arogundade and Isa Zailani.

The case has been adjourned till the 18th of April for continuation of arguments before Justice John Tsoho.

Nationalised Banks: CBN asks court to dismiss Bank PHB’s suit

The Central Bank of Nigeria (CBN), the Federal Government and Keystone bank limited have urged a Federal High Court in Lagos to dismiss a suit instituted by some shareholders of the defunct Bank PHB seeking to void the August 2011 action of the apex bank nationalising their bank.

The shareholders on behalf of Bank PHB had through their counsel, Anthony Idigbe contended that the apex Bank in nationalising their bank last year acted maliciously by singling them out for punishment without considering their investments.

In the suit, which had the CBN, the Federal government and Keystone bank Limited as defendants, the shareholders argued that the action of the apex bank was discriminatory and constitutes an abuse of its powers by nationalising the assets of Bank PHB and transferring the same to third defendant ( Keystone Bank limited).

The bank also contended that no compensation was given to its shareholders as a result of the action.

However, in three separate preliminary objections filed by Kola Awodein for the CBN, Fabian Ajogwu for the Federal Government and Khrushchev Ekwueme for Keystone Bank limited, the defendants urged the court to dismiss the action on the ground that it was not brought within the three months period stipulated by the Public Officers Protection Act.

They also submitted that the shareholders had not shown that the action by the apex bank on August 2011 was in bad faith.

The defendants further argued amongst other grounds that the Nigeria Deposit Insurance Corporation (NDIC) was the proper person to bring the action, and not the plaintiff, whose operating licence had been revoked.

In his responding to the objections, Mr Idigbe, faulted the arguments of the defendants on the issue of time limit, saying the action was brought within the three months’ time frame provided by law.

He also contented that Bank PHB had shown by its statement of claims that the CBN acted in bad faith by singling it out for punishment.

He further argued that the plaintiff and not the NDIC who can complain about the nationalisation of the former bank PHP.

On the issue on the revocation of Bank PHB’s operating licence, he said it was a substantive issue that the court cannot determine at the preliminary stage.

Ruling on the matter has been fixed for May 12, 2012 by the trial judge, Justice Charles Archibong.

The Nigeria Deposit Insurance Corporation (NDIC) last August announced revoked the operating licenses of Afribank Nigeria Plc, Spring Bank Plc and BankPHB on the bases that they have not shown capacity and ability to recapitalise before the September 30 deadline.