Thursday, 21 March 2013 /SEC Nigeria Release
The Securities and Exchange Commission (SEC) has suspended Ecobank Plc from acting as a receiving banker and from all capital market activities.
The suspension is as a result of the role played by the bank in a complaint by Avil Services Ltd relating to a margin loan transaction with Arian Capital Management Ltd
Under the said transaction, Arian Capital Management Ltd (a fund manager) advanced margin loan to Avil Services Ltd which was secured by 555, 555 units of First Bank of Nigeria Plc shares belonging to Avil Services Ltd.
At the termination of the margin facility, Avil Services Ltd demanded for the lifting of the lien placed on the shares but was informed by Arian Capital Management Ltd that the said shares were used as collateral for a “Global Margin Facility” that was granted to it (Arian Capital Management Ltd) by Ecobank Nigeria Plc in a tripartite arrangement.
Dissatisfied by the explanation offered by Arian Capital Management Ltd, the SEC in May 2012, suspended Arian Capital Management Ltd from all capital market activities for withholding the said shares and accruals thereon.
In July 2012, the SEC pursuant to Section 13 (r) and (t) of the Investments and Securities Act 2007 requested further explanation from Ecobank Nigeria Plc on the consent of Avil Services Ltd in the “Global Margin Facility”. This explanation is yet to come from Ecobank Nigeria Plc despite repeated demands for it.
The suspension was imposed on Ecobank Nigeria Plc on February 5, 2013 for its perceived connivance with Arian Capital Management Ltd to convert the 555, 555 units of First Bank of Nigeria Plc shares belonging to Avil Services Ltd.
The suspension will continue to be in force until the bank clears all the issues relating to the use of Avil Services Ltd’s shares as collateral for the Global Margin Facility it granted Arian Capital Management Ltd.
ECOBANK Plc Reacts:
According to Reuters, “spokeswoman for Ecobank Nigeria, Adenike Laoye said the bank takes payments for retail participation in initial public offerings (IPOs), but does not deal in the secondary market”.
The Togo-based bank's Nigerian capital markets arm, ESL Securities Limited, does deal in the Nigerian markets but is not covered by the ban. "We actually don't carry out capital market activities any more. In terms of the business it's not affecting us," she said.
Laoye said the dispute concerned shares valued at 11 million naira ($69,300), and that Ecobank did not know that Arian did not own the shares. She said they had issued a cheque to the SEC to settle the amount on Thursday. Pan-African banking group Ecobank has a presence in 32 African countries and around 9.4 million customers, some 6.4 million of them in Nigeria. Its operation in Nigeria, Africa's second biggest economy, makes up the lion's share of its business. Nigeria makes up about 44 percent of assets and revenue and 35 percent of its loans.