demand of preference in sale of banks by Shareholders

Existing shareholders of rescued banks want to be given the right of first refusal before new core investors can be invited to bid for the rescued banks. According to them, it would amount to illegality for the Central Bank of Nigeria appointed management to negotiate for new core investors without allowing the shareholders any chance to recapitalise the banks.

Sunny Nwosu, national coordinator of the Independent Shareholders Association of Nigeria, said if the issue with the rescued banks was funding, the existing shareholders should be given the opportunity to bring in funds.

“If there is an issue of capitalisation, shareholders must be called upon to recapitalise between 18 months and two years,” Mr. Nwosu said.

Manner of sack

According to him, the manner in which the Central Bank sacked the previous management of the banks did not follow due process.

“The laws governing the way businesses are run in Nigeria are clear on how the Central Bank can discipline erring directors. Let us go down memory lane. During the tenure of the former CBN governor, Joseph Sanusi, some top bank directors were removed but they were removed through the board,” he said.

The Central Bank in August 2009 sacked managing directors of eight banks on the grounds that they were poorly run, lacked corporate governance, and granted loans without due process. Subsequently, it injected N627 billion in the banks in order to keep them afloat and appointed new management to run the affected banks.

The banks were saddled with huge non performing loans to the tune of over N2 trillion. Since then, the CBN has seen to the set up of AMCON, to take up the non performing loans off the books of the banks so that they can resume lending to the real sector. The intention is to make the banks attractive enough for new core investors to buy in order to strengthen the governance and management structures in the banks.

Mr. Nwosu said shareholders were in court to stop any effort to sell these banks. “We have been told that this government respect laws and rules by law. The fact is you cannot sell what you don’t own,” he said.

He added that shareholders were just not comfortable with the role AMCON will play in getting new core investors in the banks.

Aderemi Oyepeju, chairman, Ibadan Zone Shareholders’ Association, said all the rescued banks have met with shareholders where resolutions were passed on how to achieve the recapitalisation of the banks. He said shareholders gave the banks mandate to negotiate with new core investors, without eroding the value of existing shareholders.

He said the banks were advised to appeal to aggrieved members to withdraw their cases in court.

“The only other alternative will be to liquidate the bank. What is the use of holding one billion units of a worthless bank?” Mr. Oyepeju asked.

Justified action

He said events that have unfolded since the CBN intervention have justified the regulator’s action.

“Cecilia Ibru’s case is a justification. Apart from Afribank and Finbank which suffered from bad investment, all the other banks were justified. The only difference is that the CBN should have done it more quietly, instead of celebrating it in the media,” he said.

Mustapha Chike Obi, managing director of AMCON, said recently that the asset company and existing shareholders are going to negotiate with the acquisition partners.

“The negotiation with the mergers and acquisition partners will determine the final shareholding of the existing shareholders, AMCON, and the new shareholders,” he said. Mr. Chike Obi said existing shareholders will not be forced to sell off their holdings.

“They may sell at the market if they feel the market is high enough, or stay and be partners with AMCON in the new capitalised bank,”

Source:234next.com