THE decision to offload the bridged banks from the debt portfolios of the Asset Management Corporation of Nigeria (AMCON) has been reached, so the dye is cast. Enterprise Bank seems to be the first in the series to go, even as speculations are high that submission of interest on the financial institution will close on Friday (September 20).
As usual, the pre/post-sale challenge could be who the preferred buyer is and what happens to the employees of the bank? Also, whether there will be a local content in the new ownership structure and what level of local ownership may also emerge as posers?
These considerations become imperative, because when foreign interests dominate businesses, the tendency is high that their operations and vision are dictated by the foreign parent company, which may not always give the expected consideration to issues on ground. Basically, protection of capital and repatriation of same and profits (capital flight) is usually the case at the detriment of the local economy. It may not only have occured in the financial system, but we have seen or heard of such development in some sectors of the nation’s economy.
Beside the bridged banks, there are no fewer than 12 other financial institutions that are globally acknowledged and ranked among their peers in the world and the continent, with laudable positions, making giant strides in their operations like Zenith Bank, FirstBank of Nigeria Plc, Guaranty Trust Bank Plc, Access Bank Plc, United Bank for Africa Plc, Ecobank Nigeria Plc, Fidelity Bank Plc, First City Monument Bank Plc, Skye Bank Plc, Diamond Bank Plc, Stanbic IBTC Plc, Union Bank and Standard Chartered Bank.
These financial institutions, going by their respective quarterly profit declarations, whether audited or unaudited, future profit and growth projections and the present balance sheet sizes, may be tipped as capable of financing the takeover of Enterprise Bank, either solo effort or as consortium. The emergence of either option could be a healthy development for the financial system and an audacious move as well. It could also help to let remain what belongs to us and that is another brand of local content worth venturing into.
Alongside these banks, is the new entrant- Heritage Bank Limited, which is also showing signs of a survivor. With few branches at the commencement of operations in March 2013, having taken over the licence of the former Societe General Bank of Nigeria and introduction of Information Technology-centric operations, there is no doubt that branch expansion is in their plans. But can it spring a surprise amid the financial obligations involved in settling verified depositors of former SGBN? Could this be the opportunity?
Granted, the economic stance in Nigeria at the moment may not be totally favourable for all local investors, including the institutional ones, but we also do not want to foreclose. In our country, the tendency is usually there to believe that it is only when foreigners bring their money that things can be done. Sometimes, it has worked that way, but not all the times. According to the Lead Director of Centre for Social Justice, Eze Onyekpere, “there have been futile attempts at covering self-evident economic facts with the deceit of graphs and charts, half truths, blackmail and slavish following of ideologies that have no place in the liberation of the average Nigerian from economic slavery. Yes, the Nigerian has been enslaved, pauperised, dehumanised, abused and lied to by those who have been entrusted to manage his economic affairs.” This may not be far from the truth as many times that the issue of sale of banks or takeovers have happened, the average Nigeria worker has emerged the greatest loser. But could this time be different?
There are reasons to believe that Nigerians can do it for themselves. For instance, Onyekpere recalled how Alhaji Aliko Dangote emerged into the scene of oil and gas recently, with a big plan to build 400,000 barrels per day refinery, petrochemical complex and fertiliser plant to be situated in Nigeria at a total cost of $9 billion. It takes encouragement, courage and adequate awareness from the regulators to get and motivate the right investor(s).
“Last week witnessed a bold step towards the refinery building process through the signing of a $3.3 billion loan agreement with a consortium of 12 local and international banks,” Onyekpere added. The point here is the fact that consortium of banks eventually surfaced to finance the project and most importantly, Dangote Group seems to be the greatest individual contributor to the total cost of the project with over $4 billion. The local content in this case is high and control of the operations is expectedly going to be “local” and presumably, the interest will be “local” too.
The truth is that bridging the banks ab initio, was better than allowing them to collapse. For one thing, the workforce was sustained to an extent that would not have been compared to unemployment. But the other truth is that some of these bridged banks were ab initio, product of individual or group of individuals’ efforts, which through transformational processes reached the height. In all, they were homegrown by “home people”, hence the preservation of the history by a more structured arrangement should be the watchword.
Recently, AMCON opened the race for the takeover, when it formally invited interested buyers to express interests in acquiring its 100 per cent stake in Enterprise Bank Limited- one of the three banks nationalised by the Federal Government in 2011. It also said that prospective buyers of the bank would be required to submit their bids by September 20 and show evidence of financing capacity.
The corporation had in July, appointed Citigroup and Vetiva Capital, to manage its divestment from the bank. The scheme of things, according to sources, included a shortlist of buyers upon the receipt and evaluation of the expression of interest, while they would proceed to the first phase of the transaction. Few months ago, AMCON announced the beginning of the final process for the sale of the three bridge banks and indicated that it would start with the sale of Enterprise Bank, followed by Keystone Bank and Mainstreet Bank. The corporation expects to complete the sale of the three banks by September 2014, offloading 100 per cent stake in each of the financial institutions.
According to a report, based on its 2012 audited accounts, Enterprise Bank has seven subsidiaries and 150 branches, with total assets of N263.5 billion ($1.6 billion) and total equity of N31.9 billion ($195.3 million).
Reports also said that the Managing Director, AMCON, Mustafa Chike-Obi, expressed optimism that there would be strong interest in the three banks from local and foreign institutions, with the Chief Executive Officer of FirstRand, Sizwe Nxasana, once said that he was keen on buying either Keystone or Mainstreet, while the Managing Director, Skye Bank Plc, Kehinde Durosimi-Etti, also told shareholders at a recent meeting that the lender would bid for one of the three banks, depending on valuations.
Speculations are now rife that the putting of Enterprise Bank for sale first among the three may be to test the waters of privatisation with the doctrine of the smaller the size the smaller the risk, while anything learnt from the process, may serve as a compass in navigating the journey of the subsequent efforts.
But the bank seemed to have returned to profitability going by reports. The Chairman of Enterprise Bank, Emeka Onwuka, had attributed the achievement of the bank to the sustained growth in quality risk asset creation, which equally engendered growth in interest income.
The “improvements in our other banking income items such as commissions, fees, electronic banking income, significant improvements in trade-related transactions, facilitated through our strategic focus on Small and Medium Enterprise (SME) helped in boosting our fees and commission income. A solid foundation has been built by the bank to ensure a sustainable growth in its business activities. Renovations were carried out on the corporate head office and branches of the bank, which will enhance the competitiveness of the bank in the industry. Several brand management initiatives were implemented in the year, in a bid to create more awareness about the bank in the marketplace. The bank’s electronic banking platform has been further enhanced by capital investments in Automated Teller Machines (ATMs), Point of Sale (PoS) terminals and several variants of electronic cards.”
Also, the Managing Director of the bank, Mallam Ahmed Kuru, reaffirmed his assurance at the appointment of Citigroup and Vetiva Capital Management Limited as financial advisers in the sale of the bank, saying that the appointment was certainly the last lap of the long journey to better days ahead for all stakeholders and that customers would have the best deal at the conclusion of the process in the appointment.
“I am convinced our customers expect the best deal at the end of the day. So their expectation should be high. As members of staff of the bank on the other hand, we have had the responsibility of explaining to all our esteemed customers that the process is in the best interest of everybody. I say this because if there is any singular beneficiary of this process, it is the staff whose jobs have been secured because whoever is buying the bank is definitely going to be interested in the quality of staff that we have developed in the bank.”
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