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.
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.
A Federal High Court sitting in Lagos on Monday ruled that the Central Bank of Nigeria (CBN) acted within its powers under the CBN Act & particularly Section 53 of the Banks and Other Financial Institutions Act (BOFIA), 2004 when it intervened to save depositors funds in Bank PHB. The Court held that documentary evidence available before it showed that Bank PHB had a non-performance loan of N475 billion with its liquidity ratio below 25% and held that the bank indeed showed a sign of a failing bank which was in dire need of capital and in contravention of the provisions of the Act.
The presiding judge, Justice Charles Archibong therefore dismissed a suit filed by Bank PHB against the CBN, Keystone Bank and the Federal Government challenging the revocation of its banking licence, and takeover of its assets by the Nigerian Deposit Insurance Corporation (NDIC) and the Asset Management Corporation of Nigeria (AMCON).
He also dismissed the argument of Bank PHB that the CBN’s act of revocation was tainted with malice and held that “CBN cannot standby, once it is shown that depositors’ funds were in danger”.
The Court further held that it could not find that the CBN acted beyond its powers or did not comply with the provisions of the law on revocation of the banking licenses of Bank PHB.
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.
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.
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.
The Economic and Financial Crimes Commission (EFCC) on Monday accused the former Managing Director of Bank PHB, Francis Atuche, of buying the bank’s shares for 18 companies belonging to him and his wife, Elizabeth Atuche.
David Nkpe, a field investigator with the EFCC who made the allegation, before a Lagos High Court sitting in ikeja, also said that the shares, worth billions of naira, were fraudulently purchased using funds belonging to Bank PHB.
The EFCC had charged Mr Atuche, his wife, Elizabeth and a former Chief Financial Officer of the bank, Ugo Anyanwu to court for allegedly stealing over N25.7 billion belonging to Bank PHB (now KeyStone Bank) between November 2007 and April 2008, while Mr Atuche was the Chief Executive Officer of the bank.
Mr Nkpe who was led in evidence by the EFCC prosecutor, Kemi Pinheiro, said that the 18 companies belonging to the former bank chief executive officer purchased the shares during a public offer by Bank PHB in May 2007.
The companies are Claremount Investment Limited, Montrax Investico, Stanford Global Limited, Arabian Probity, Consolidated Business Support Limited, Commercial Trading Limited and Filemon Enterprise.
It also includes Oakwood Asset Limited, Ventures Resources, Caledonia Enterprise, Financial Company Limited, Claremount Asset Management Limited, Clairville Business Support.
Others are Gazali Yakubu Limited, Afco Associate Limited, Septron Trading Limited, Guess-Trade Services Limited and Nolly Investment Limited.
The EFCC witness said a thorough investigation and confirmation from the Corporate Affairs Commission (CAC) revealed that these companies were mainly owned by the Atuches.
According to him, these companies never repaid the money back to Bank PHB despite the fact that the transactions placed them on the top 1,000 list of the bank’s shareholders.
The Presiding Justice Lateefah Okunnu adjourned till Wednesday, 28 March for continuation of trial.
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.
An Ikeja High Court sitting on Monday dismissed an application filed by the former Managing Director of Bank PHB (now Keystone bank), Francis Atuche seeking an order to quash the charges of stealing brought against him and a former Director of the bank, Lekan Kasali by the Economic and Financial Crimes Commission (EFCC).
Presiding Justice Adeniyi Onigbanjo said that the application lacks merit and that the charge against the former bank chief is not defective and incompetent.
Mr Atuche had sought an order striking out his name from the charge on the basis that the transactions on another charge against him before the Federal High Court and the one at the Lagos High Court were interlinked.
He added that the EFCC, acting for the Attorney-General of the Federation, can only prosecute a crime under a Federal Law, and not under the Administration of the Criminal Justice Law of Lagos State.
Justice Onigbanjo in his ruling dismissed all the arguments raised by Mr Atuche.
The judge distinguished between the cases at the Federal high court & that at the State High Court. He said the charges at the Federal High Court bordered on his alleged granting of credit facilities illegally while that before his court had to do with stealing and conspiracy to steal.
The court also maintained that the two matters before it and the one before Justice Lateefah Okunnu of the same court had to do with different transactions that Mr Atuche was allegedly involved in, though all the alleged offences were committed when he was the Chief Executive Officer of the defunct Bank PHB.
The judge also overruled Mr Atuche’s argument that the way the case was being handled could prejudice his right to fair hearing.
The judge said that though the case had generated public interest, it would not in anyway affect the decision of the court.
Justice Onigbanjo rejected the former bank chief’s argument that the proof of evidence did not disclose a prima facie evidence against him before adjourning till the 24th of May for commencement of trial.