Reps Committee Summons Ecobank , Oceanic Over Acquisition
Category: Mergers & Aquisitions
December 14, 2011
The House of Representatives Committee on Capital Market and Institutions has summoned the managements of Oceanic Bank International Plc and Ecobank Transnational Incorporated (ETI) over the recent acquisition of Oceanic to ascertain if due process was followed.
Competent capital market sources told THISDAY that the Committee had already written to the banks inviting them to appear before it.
“The Committee has written to the banks and they will appear before it this week. The Committee believes that at this stage of the nation’s development and considering our history regard must be had for not just the outcome but the process that led to mergers and acquisitions.
“Moreover, the House of Representatives, as the representatives of the people cannot just fold its hands and shy away from its constitutional responsibilities. This is essentially the way the committee’s mid is working,” the source close to the Committee said on Monday.
The Committee had last August said it would probe the nationalisation of three of the rescued banks and the recapitalisation of the remaining five.
The investigation process apparently began last week when it invited the management of Union Bank of Nigeria Plc over its proposed recapitalisation.
After the meeting with bank and the Securities and Exchange Commission (SEC), the Committee advised SEC not to approve the bank’s Rights Issue.
The Committee told SEC : "In view of the inability of the management of Union Bank of Nigeria Plc to provide key answers to various queries this committee has raised relating to Union Bank’s compliance with rules, procedure and statutes guiding Rights issues placing and capital reorganisation, we request that the securities and Exchange Commission (SEC) withhold further approvals of the said transaction pending the outcome of hearing where Union Bank will be expected to come with relevant documents and information regarding the matter in question."
The Committee Chairman, Herman Hembe had explained that the stoppage of further approval was meant to safeguard the interests of the shareholders and to ensure that due process was followed in the fund raising.
Hembe had said the ongoing mergers and acquisitions of banks, which operations fell directly within the purview of that committee had largely been flawed.
“Laws, rules and procedures have not been followed. We will step in to ensure the rule of law. Following my appointment, I have received quite a number of petitions regarding these mergers particularly with respect to the fact that some very high bids were disregarded in favour of lower bids. It is my resolve and that of this committee to intervene in the best interest of the Nigerian investor," he said.