Unlike many of the other rescued banks Bank PHB may no need to look far in its quest for a core investor. Reason: reports reaching Business Hallmark at the weekend indicate that one of the bank's institutional shareholders, Habib Bank Limited is set to increase its stake and takeover the ailing financial institution. Indeed, according to a source within the bank, the process has reached an advanced stage with the paperwork that effectively makes senior executives of Bank PHB staff of Habib Bank Limited already completed.
Industry sources told Business Hallmark that the development was good for shareholders of Bank PHB as they now had a chance of recouping some of the massive losses they had suffered as a result of the catastrophic decline in the fortunes of the bank in the last one year.
Prior to the CBN intervention, Bank PHB was one of the fastest growing and most innovative banks in the industry. Its award winning commercials that leading advertising agencies churned out, its several popular products and so on, all showed that the bank was in a hurry to get to the top. But its decision to acquire Spring Bank in 2008, many financial analysts now agree, left its books in such bad shape that it was arguably the main reason why the bank did not pass the CBN special audit when the final results were announced on October 2nd 2009. According to the apex bank, Bank PHB along with Equitorial Trust Bank Plc, Spring Bank Plc, and Wema Bank Plc, were found to be in a “grave condition”, having failed on all three parameters- liquidity, capital adequacy and corporate governance- that were used to assess the health of the banks. It is now a well known fact that the acquisition which reportedly cost Bank PHB a staggering N65billion at a time when the consolidation propelled boom in the industry was showing signs of ebbing, encumbered the bank in many other ways including increasing its Non- Performing Loans (NPLs) portfolio and bogged down the financial institution that used to be one of the fastest growing and innovative banks in the industry, with among other things, numerous law suits, the key one, of which, was only decided early this year when a High Court nullified the acquisition- that is, after the bank had been hammered by the industry's top regulator. It is still not over as the matter is currently on appeal.
In sacking the former management of the bank led by Mr. Francis Atuche, the CBN accused them of giving out over N170billion(this figure was to later rise to over N400 billion) unsecured loans to friends and relations contrary to laid down credit approval procedures. But there are analysts who contend that the main reason why the bank's former management was removed had to do with the Habib Bank Nigeria connection. According to this group, during the merger between the legacy Platinum Bank and Habib Bank of Nigeria in 2005, the latter was actually the dominant partner in the combination. However, the Platinum Bank management led by Atuche was able to outmaneuver the Habib people during negotiations between the two parties with the result that Platinum Bank ended up as the stronger partner in Bank PHB. But as the story goes, the Habib team did not forget this incident and with the family of the late President Umar Musa Yar'Adua as one of its leading shareholders, decided to wait for an opportunity to exact their revenge. The opportunity, it is claimed, presented itself during the CBN commissioned audit test of the sector last year. And now with the imminent take over of the bank by Habib Bank Ltd, their revenge, it is being said, is truly complete!
Return to profitability
After the massive losses it declared for 2009(pre-tax loss of N488 billion compared to a profit of N27.19 billion the previous year) that was caused by the huge provisioning made for NPLs, Bank PHB's results for the first quarter of 2010 showed that it made a Profit After Tax of N2.9billion. But this was due mainly to a staff rationalization exercise which saw the bank laying off about 1,000 staff out of its staff strength of about 7,000 (resulting in savings of N4.5billion annually) and recoveries of NPLs estimated to have now exceeded the N10billion which it had recovered as at March 2010. To assure investors that the future is bright, the management recently disclosed that it is projecting a profit after tax of N7.9 billion for its third quarter result ending September 30, 2010 and NPLs recoveries of N60billion before the end of the year.
Founded in Pakistan
The Pakistani owned Habib Bank Limited established the old Habib Bank of Nigeria Limited with 40 per cent ownership in 1981. HBL was the first commercial bank to be established in Pakistan in 1947.Over the years, HBL has grown its branch network and become the largest private sector bank in Pakistan with over 1,450 branches. It, also, has global presence through branches, subsidiaries and affiliates in 25 countries and owns 90.5 per cent of its subsidiary in the United Kingdom, Habib Bank UK.