Citibank and Renaissance Capital (RenCap), the financial advisers appointed by the Asset Management Corporation of Nigeria (AMCON) last September to value the assets of the three bridge banks – Enterprise Bank, Mainstreet Bank and Keystone Bank – and figure out how best to dispose of them, have recommended the option of strategic investors in the banks, BusinessDay investigations have found out.
Citibank was appointed as financial adviser to Mainstreet Bank, while RenCap was appointed to undertake the advisory work on Enterprise and Keystone Banks.
The option adopted by the advisers as against listing them on the nation’s capital market was informed by the moral burden listing would put on the banks, considering that some Nigerians have lost their life savings to the defunct Afribank, Bank PHB and Spring Bank.
Besides, indication of interests by some foreign banks was another reason for the strategic investment option. For instance, First Rand limited, South Africa’s second largest bank, which recently acquired a merchant banking licence from the Central Bank Nigeria (CBN) is said to be eyeing one or two of the banks to help fund its investment banking arm, Rand Merchant Bank (RMB) in Nigeria.
Alan Pullinger, the unit’s chief executive officer, reportedly said last year that “FirstRand may buy a retail and commercial lender in Nigeria to support its investment bank and win access to consumer deposits for corporate funding”.
“We are exploring various options in Nigeria, including the assets which form part of the Asset Management Corporation of Nigeria,” Sam Moss, a director of FirstRand reportedly said.
Speaking with BusinessDay, a top industry official said, “The recommendation is that AMCON should look for strategic investors for the banks and that it should do so as quickly as possible,” adding that the fact that many people lost their lifetime savings to the banks will make them not appealing to ordinary investors if they are listed in the equities market.
“You have to understand that there are moral burdens bringing same banks to the market for same people, if you like, to come and invest again,” he said.
Strategic investors are individuals or firms that add value to their investment through requisite contacts, experience and knowledge of market, thereby brightening the prospects of the banks for additional investment and success.
BusinessDay learnt that the advisers also suggested early disposal of the banks in order to save them from negative perception and stigmatisation, as government banks that are being sustained by public funds. AMCON has so far injected N679 billion into the banks for them to meet the minimum capital base of N25 billion and the minimum capital adequacy ratio of 15 percent.
In addition, the current unhealthy industrial atmosphere in the banks, fuelled by litigations by ex-staff and
the continued face-off with the unions may have necessitated the call for early disposal of the banks.
It is not certain when AMCON’s board will meet to study the recommendations of the advisers, but a source close to the corporation said all deals concerning the three banks would be concluded by the middle of next year.
Mustafa Chike-Obi managing director, AMCON, reportedly said last year at the opening of the 16th annual Chartered Institute of Stockbrokers, (CIS), conference and induction of new associates that the corporation was weighing the option of core investors and listing on the Nigerian Stock Exchange, adding that their final decision would be based on the recommendation of the advisers.
Last September, AMCON appointed the advisers with the mandate to value the assets and liabilities of the three banks and advise the corporation on how best to dispose of them, so as to maximise value in the disposal exercise.
The three banks were established on August 5, 2011, through a ‘bridge bank’ process, following the inability of the defunct Spring Bank Plc, Bank PHB Plc and Afribank Plc to recapitalise. They were thereafter sold to AMCON on August 6 through a subscription agreement.
JOHN OMACHONU
