Fidelity Bank plans buy of rescued bank

Fidelity Bank plans buy of rescued bank

 

Fidelity Bank is interested in buying one of nine banks rescued by the central bank earlier this year and is awaiting guidelines on how such a bid would proceed, its chief executive said on Wednesday.

 
Reginald Ihejiahi told Reuters Fidelity Bank had been speaking with consultants to the central bank and was waiting for a letter detailing how any deal would be structured. "We are interested in making a bid," Ihejiahi said in an interview in his office in the commercial capital Lagos.
 
 
"There are a couple of things for a serious minded institution ... that we would like to see as part of this opportunity, which we have expressed to the consultants." He declined to specify which banks Fidelity might be interested in acquiring but said the central bank appeared keen to get the process underway as quickly as possible.
 
 
The central bank has injected around 600 billion naira into the banking system since mid-August after its auditors found nine institutions had built up bad loans which left them too weakly capitalised to sustain operations.
 
 
It injected N400 billion into Afribank, Finbank, Intercontinental Bank, Oceanic Bank, and Union Bank on August 14 and sacked their top management after the first round of the audit. Two months later it said it was providing N200 billion to four more banks -- Bank PHB, Equitorial Trust Bank, Spring Bank, and Wema Bank -- also judged to be facing a grave liquidity crisis.
 
 
The regulator has said the businesses will be run as going concerns until new investors can be found to recapitalise them and that its preferred option is for them to be bought out. Ihejiahi said that whereas past takeovers of failed banks in Nigeria involved buying assets of institutions whose licenses had been revoked, the nine rescued banks still had shareholders, meaning the acquisition process would be more complicated.
 
 
"This is the first time that we are seeing this sort of structure," he said. "I wouldn't call it a concern, I would call it something that you have to put on your checklist and see how it is treated and how it is going to be considered for anybody who is making a bid in a circumstance that is new."
 
 
(Source: BusinessDay)

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