FG Returns to Bank Ownership
- By Nik Ogbulie
- Published June 28th, 2011
- News
- Unrated
Recent developments in Nigeria’s banking sector indicate that the federal government may be preparing to use the Assets Management Company of Nigeria (Amcon) as a pipe to returning to the industry as a major investor in most of Nigerian banks.
Indications to this emerged over the weekend as developments suggest that a good number of the bailed-out banks may not find any way out of their troubles before the September 30, 2011 deadline. Some of the banks that may soon get out of the nasty situation may have to grapple with a heavy dose of Amcon debt to equity holding which eventually may bring back the government to the sector’s board room.
While indicating that Union Bank of Nigeria (UBN) Plc has all it takes to meet the September deadline, Funke Osibodu, group managing director of the bank, explained that as much as N239 billion of its bad debt has been acquired by Amcon. Huge amounts like this are believed to have been taken up by the rescuing outfit indicating the propensity for it to have a controlling volume of stakes in them.
Union Bank last week outlined a clear all-inclusive plan to raise between N270 billion and N300 billion required to make the institution retain its international banking status, just as it assured all stakeholders that it would complete its recapitalisation process before the September 2011 deadline stipulated by the Central Bank of Nigeria (CBN).
Osibodu said the bank would soon sign the Technical Implementation Agreement (TIA), which details the commitments the bank and its potential core investors - African Capital Alliance Consortium (ACA Consortium), had earlier agreed to under the memorandum of Agreement (MoA)
She said the bank would draw on the three main stakeholders including shareholders, the new core investors and Amcon to raise the outstanding capital
According to the plan, out of the estimated amount, Amcon would inject some funds to bring the bank’s negative shareholders’ funds to zero as at the cut off date; the new core investors would bring $750 million (N114 billion), while shareholders would be given opportunity to further invest in the bank through a rights issue.
Osibodu pointed out that the confirmatory due diligence that affirmed the core investors’ ability to pay and the readiness of Amcon to inject funds as well as the window of opportunity given to shareholders make an infallible process that would see Union Bank as a leading bank ahead of the September 2011 deadline.
It would be recalled that the federal government, many years back, had divested its holdings in banks except in the development banks . There are beliefs that since Amcon is a scion of the federal government, its representatives in those banks will be nominated by the government, a situation many said would bring back politics into the industry.
Indications to this emerged over the weekend as developments suggest that a good number of the bailed-out banks may not find any way out of their troubles before the September 30, 2011 deadline. Some of the banks that may soon get out of the nasty situation may have to grapple with a heavy dose of Amcon debt to equity holding which eventually may bring back the government to the sector’s board room.
While indicating that Union Bank of Nigeria (UBN) Plc has all it takes to meet the September deadline, Funke Osibodu, group managing director of the bank, explained that as much as N239 billion of its bad debt has been acquired by Amcon. Huge amounts like this are believed to have been taken up by the rescuing outfit indicating the propensity for it to have a controlling volume of stakes in them.
Union Bank last week outlined a clear all-inclusive plan to raise between N270 billion and N300 billion required to make the institution retain its international banking status, just as it assured all stakeholders that it would complete its recapitalisation process before the September 2011 deadline stipulated by the Central Bank of Nigeria (CBN).
Osibodu said the bank would soon sign the Technical Implementation Agreement (TIA), which details the commitments the bank and its potential core investors - African Capital Alliance Consortium (ACA Consortium), had earlier agreed to under the memorandum of Agreement (MoA)
She said the bank would draw on the three main stakeholders including shareholders, the new core investors and Amcon to raise the outstanding capital
According to the plan, out of the estimated amount, Amcon would inject some funds to bring the bank’s negative shareholders’ funds to zero as at the cut off date; the new core investors would bring $750 million (N114 billion), while shareholders would be given opportunity to further invest in the bank through a rights issue.
Osibodu pointed out that the confirmatory due diligence that affirmed the core investors’ ability to pay and the readiness of Amcon to inject funds as well as the window of opportunity given to shareholders make an infallible process that would see Union Bank as a leading bank ahead of the September 2011 deadline.
It would be recalled that the federal government, many years back, had divested its holdings in banks except in the development banks . There are beliefs that since Amcon is a scion of the federal government, its representatives in those banks will be nominated by the government, a situation many said would bring back politics into the industry.
