Nine (9) sick banks to be sold Q2 2011
by Odidison Omankhanlen, Lagos, with Agency Report Wednesday, 15 December 2010
Barring any unforeseen development, nine out of the 10 rescued banks will be sold to new investors by the second quarter of next year.
Chief Executive of Asset Management Corporation of Nigeria (AMCON), Mustapha Chike-Obi, who gave this indication in an interview with a foreign news agency, Reuters, stated that going by the level of interest shown in the banks and the structure put in place by his corporation, nine of the 10 banks rescued in a N620 billion bailout would be recapitalised by the second quarter of 2011.
Following are some facts about the rescued banks, their shareholder structures and their potential suitors.
Afribank, the commercial and retail bank which began operations in 1960, has seven subsidiaries, including capital market and stock broking businesses as well as a real estate company. Afribank has about 300 branches with close to 3,000 employees and is one of Nigeria’s first generation banks. Its shareholder structure is 71 per cent free float, 28 per cent under asset management nominee accounts, and one per cent directors. Before the bailout, it was seventh-largest bank by assets in the country, but it had since made significant write-downs. Banking sources said a consortium of private equity investors had emerged as the preferred bidder for Afribank, with local rival, Fidelity Bank, the reserve bidder. Afribank said it was in talks with potential investors, but gave no further details.
Bank PHB is the product of a merger between Habib Bank and Platinum Bank, emerging after the first round of banking industry consolidation in 2005. Its rapid growth made it one of Nigeria’s top eight banks before the bailout with around 220 branches. Its shares are 78 per cent free float with the rest held by directors. It made provisions of N370 billion for risk assets, loan losses and goodwill impairment by end-September. Banking sources said Habib Bank, one of Pakistan’s biggest lenders, was in talks with Bank PHB about increasing its existing share-holding, while the Bank PHB had said it was in talks with a consortium of international financial institutions led by a bank, but declined to comment further.
Equitorial Trust Bank (ETB) accounts for less than one per cent of the total banking sector in Nigeria, according to the Central Bank of Nigeria (CBN), which means there is no risk of an acquisition breaching the regulator’s 20 per cent market share rule. The bank started operations in 1990 and merged with Devcom Bank with the same main shareholder in 2006. It has 100 branches. Shares in Equitorial are privately held, but shareholders had pledged to diversify the capital base, either through a public offering of shares, securing a core investor or merging with a local institution.
Finbank was created out of a merger between First Atlantic Bank, Inland Bank and IMB Bank during a consolidation about four years ago. Analysts considered Finbank a ripe acquisition target, because it offered a niche business and a potential acquirer would not exceed the market share rules set by the CBN. Banking sources confirmed that First City Monument Bank (FCMB) was the preferred bidder for Finbank, while the bank had said it was in talks with a potential investor, but made no further comment.
Intercontinental Bank was established in 1989 as a pure merchant bank and converted to commercial banking in 2000. It has grown to be a top-tier bank, at one point becoming the country’s largest by Tier 1 capital. Shares in Intercontinental are 86 per cent free float and 14 per cent held by the directors. Banking sources said the bank was in talks with a local rival about recapitalisation but no further details had emerged.
Oceanic Bank was set up in 1990. It currently has 342 branches in the country. More than a third of its shares are held by the directors, six per cent directly and 33 per cent indirectly. Its free float is 46 per cent, with the remaining 15 per cent held by institutions. Banking sources have said the bank was in recapitalisation talks with a local rival.
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