By Ademola Alawiye

Friday, 7 Jan 2011

There are strong indications that domestic Deposit Money Banks that passed the stress test conducted by the Central Bank of Nigeria and the Nigeria Deposit Insurance Commission will acquire most of the rescued banks.

Our correspondent gathered from a source at the Central Bank of Nigeria on Thursday that the strong banks with lesser branch networks are more interested in the rescued banks.

The source, who craved anonymity, said, ”The bulk of the buyers of the rescued banks will be domestic banks. The healthy banks with limited distribution networks in terms of branches have shown more interest in buying the banks.”

He added that the rescued banks would seal their recapitalisation deals in the second quarter of 2011 and the agreements would be finalised immediately after the acquisition stage of the Asset Management Corporation of Nigeria.

He said, ”Arrangements have been put in place for the remaining seven rescued banks to finalise their recapitalisation deals as soon as AMCON acquires their non- performing loans. This is going to take place in the second quarter, immediately after the acquisition stage of AMCON.”

The acquisition stage, according to the Managing Director, AMCON, Mr. Mustafa Chike-Obi, is expected to be over by the second quarter of this year.

The source noted that with the exception of Wema Bank Plc, Unity Bank Plc and Equitorial Trust Bank Limited, the other rescued banks would have to be bought over by core investors, except if the existing shareholders were ready to raise enough funds.

Unity Bank had successfully raised N17.34bn through a Rights Issue, thereby meeting the regulatory capital requirement and the minimum capital adequacy ratio of N25bn and 10 per cent respectively, to operate as a national bank.

Also, Wema Bank had raised N7.5bn fresh capital through a Special Placement Offer to operate as a regional bank with a regulatory capital requirement of N10bn.

The CBN had earlier revised its position on ETB because of Dr. Michael Adenuga‘s prompt repayment of N26bn in loans previously classified as non-performing.

When our correspondent contacted some of the banks to confirm how far they have gone on their recapitalisation, the spokesperson of Afribank Plc, Mr. Moshood Isamotu, said, ”All the rescued banks have been in talks with one or more core investors. There is no bank that has not been talking to investors. We have to wait for the right time; we can‘t work outside the time-table of the CBN.”

The Head, Corporate Affairs, Union Bank of Nigeria Plc, Mr. Francis Barde, said, ”We have got approval from our shareholders, and we are talking to a core investor currently. Hopefully, we should seal our deal before that time, subject to the CBN‘s approval.”

 

Source: Punch