RECAPITALISATION: CONTROVERSY OVER PLANNED SALE OF AFRIBANK
Sanusi
There seems to be palpable fear and anxiety among interest groups within and outside Afribank Nigeria Plc over the plan by a newly-registered business and financial advisory services provider (name withheld) to acquire the 53-year-old bank.
Daily Sun recent checks revealed that suspicion surrounding the impending deal may have been heightened by a desire by interested parties to confirm the mysterious financial group as the preferred investor in the bank. This is even as over eight other contenders to the plum deal who have impressive credentials were carefully schemed out.
However, those who felt uncomfortable in the proposed deal told Daily Sun that perhaps only the Central Bank of Nigeria (CBN) or its appointed management at the bank could explain the considerations or criteria used in selecting the preferred core investor in Afribank even as records show that as an entity, it has no track record, especially in running of any bank to justify the choice.
For instance, extracts from the Corporate Affairs Commission (CAC) revealed that the said bidder with Registration No 902715 was only incorporated on the July 28 2010, with an authorized share capital of N1milion. What may have raised much curiosity over the transaction was the fact that the company was being incorporated almost within the same time (if not later) that Afribank was being put up for sale by the Central Bank of Nigeria.
In the advertised schedule of sale for the eight rescued banks, the CBN had given November 29, 2009 as the final deadline for Expression of Interest by all interested buyers of the banks while March 31, 2010 was the last day for Confirmation of Interest and July 29, 2010 given for the submission of all bids. Interestingly, however, this bidder that now appear to have the upper hand was incorporated on July 28, 2010,while two directors of the company, a Nigerian and a Ghanaian, share same business address, even as details of its registration appear to have been done in a hurry. It is not clear if the timing of the registration was done purely in an attempt to snap up the juicy Afribank deal.
Another curious aspect of the deal is the N1 million-share capital of the company, a supposed investment outfit positioned to buy a bank, which had share capital exceeding N39.5 billion before the CBN intervention on August 14, 2009. The question some stakeholders who spoke to Daily Sun on condition of anonymity have been asking since details of the transaction began to unfold remains, 'who is actually buying Afribank Nigeria Plc under the ongoing recapitalization programme.
It is also curious how this same company which is also believed to be eying Finbank Plc may have been selected to clinch the deal ahead of the eight financial institutions, including four from South Africa and four local banks despite its nascent history in corporate Nigeria, raising doubts as to its capacity to manage a multibillion naira institution like Afribank Plc. Sources hinted that the South African banks which had expressed interest to buy into Afribank include Standard Bank Group of South Africa, Old Mutual Plc and Nedbank of South, while Skye Bank Plc, Fidelity Bank, First Bank of Nigeria Plc and Ecobank were front runners among local bidders.
Shareholders of Afribank are scared stiff over the deal as they fear that their bank may head the same way as United Bank for Africa (UBA) when some purported foreign investors acquired a large chunk of the bank's shares some years back only to dump them on appreciation, leaving the bank hollow and nearly distressed. It took the financial expertise of Tony Elumelu and the crack team he chose to run the bank with to pull UBA back from the brink of collapse to the present profitability that it now enjoys.
The biggest fear, however, does not appear to be the fact that the apparently favoured bidders do not have the cognate experience, as an organization, in running a bank, it is that they are essentially traders whose sole interest is to buy, play the market to push up the share price, sell and clear oil, whatever happens to the bank thereafter is of little concern to them.
It also means that the bank that is sold today could well be changing ands again in another two or three years, depending on how long it takes for the share price to appreciate, to enable the trader buyers to drop their shares and more on. Incidentally too, Daily Sun gathered another of such buyer is also on the verge of buying over Union Bank. This other bidder, which is not now in the Nigerian market, is said to be at the roof of the problems of a local newspaper, which is currently shopping for funds through private placements.
Daily Sun gathered that investors had put so much money into the newspaper (which has a heavy dose of business reporting) as the publication sought to reposition and take its business a notch higher. Incidentally, no sooner had the business stabilized and its equity appreciating than the 'alliance' with the investment group called off. The investor/buyers dropped their shares and cleared out. Now, the publishing house has been left stranded, with its original promoter now making quite moves to get other investors to do private placements.
Curiously too, the same investors who abandoned the publishing house mid-stream have suddenly reappeared at Union Bank of Nigeria, where they are said to be on the verge of also buying the bank. The fear in the industry now is whether all these investors would not ultimately kill off the banks than rescue them in the long run. They said that was why UBA at a time had some problems that nearly led to its collapse.
Despite its recent press statement to the effect that it has no hands in the ongoing Memorandum of Understanding between some of the rescued banks and their would be predators, some observers are insisting that only the Central Bank of Nigeria can unravel the true owners of current preferred buyers of Afribank and why they got the deal ahead of financial conglomerates like Standard Bank Group and Nedbank.
However, in a recent statement on the on going memorandum of Understanding between the affected banks, the CBN clearly said it was not in favour of any bidder, insisting that its role remains that of an umpire and to ensure that due process was followed in the sale.
In addition, CBN spokesman Mallam Mohammed Abdullahi told Daily Sun on telephone that it had given banks a free hand to negotiate with the prospective investors at the level of MoUs after which it would review and make its recommendations on how to progress to the next stage along with other regulatory bodies.
It would be recalled that when the apex bank intervened in the eight banks on August 14, 2009, CBN governor, Mallam Sanusi Lamido, had accused the sacked bank chiefs of mismanagement and gross abuse of lending processes. As part of strategies to stabilize the system and restore confidence in the banking community, the CBN had injected about N627biliion naira (N4.1billion) to help the institutions continue to carry out their statutory obligations to the business community.
The process of ensuring that the banks maintain a healthy financial status including the ongoing sale of their non- performing assets to AMCON was done to prepare them for predators to acquire them. With about 770billion so far injected into the affected bank by AMCON, the stage has become clearer for predators to come in to inject more capital.
This stage presupposes that for banks to progress and make good success and offer superior returns to shareholders, their management and board must be occupied by men of integrity.
The banks minority shareholders are arguing that as part of efforts to preserve their right in the institution, the current management and the CBN governor should endeavour to reveal the identity of real owners of some of these investor companies to enable them know if their investment would still be guaranteed under a new dispensation.
But, industry observers are still worried at the seeming determination of the present operators of the banks not to sell it to another bank which, many believe, would have the professional capacity to run it and turn things around quickly. An industry insider who spoke to Daily Sun, however, gave an insight into this drift. 'If another bank acquires Afribank or any other bank for that matter, chances are that the present managers (and or directors) of the acquired bank may well kiss their plum jobs goodbye, 'he said.
He explains: 'The reason is that they'd most likely be putting in a new management team. But if those who are their present are able to get their fronts, or a non-core banking investor to buy the bank, the chaces are that many of the present managers of the bank will retain their jobs.' 'It's a battle for survival,' he asserted.