Mustafa Chike-Obi, Managing Director, AMCON
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."
Source:234next.com
"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."
Source:234next.com
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