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Shareholders desperate to reclaim troubled banks

Shareholders desperate to reclaim troubled banks

Monday, November 2, 2009

LAGOS-THE major shareholders, investors and other stakeholders in the eight troubled banks are making moves to reclaim them, vowing to co-operate with the Central Bank installed managements there.

They also pledged to seek new investors and recapitalise the banks if CBN will accept the proposal.

A top official of the Central Bank who wished anonymity told Vanguard that the Board of Governors of the apex bank "will consider all proposals and do what is best for each of the institutions in question. Usually, this will take shareholders' support and preference into consideration."

At the weekend, one of the major actors in the banking reform told Vanguard through his aide, "It will be a wise thing for government to call other shareholders of banks to work with new investors to recapitalise their banks within the CBN deadline.

"This is no time to point fingers anymore; a good General knows when to retreat. Since some of the 14 banks are worse than those that were punished, equity demands that the banks should be returned to the boards and management.

"The N620 billion CBN has injected into the eight troubled banks should be left with the banks for 18 months due to the disruption it has caused.

"The minimum capital for banks is N25billion. Any bank that after provision for losses has N25bn or can upgrade their capital to N25bn should be allowed to operate at that level.

"The banks should be allowed to raise fresh capital like the other ones are doing now, raising bonds of about N1.4 trillion.

"Alternatively, they should be allowed to work with foreign partners of their choice. This will provide a level playing field for all operators in the banking sector," he added.

Other stakeholders urged President Umaru Yar'Adua to allow shareholders recapitalise their banks. This, they argued, will bring the banking reform to a middle-point conclusion that will garner the support of all.

CBN's Governor, Mr. Lamido Sanusi, had told Vanguard that shareholders in the eight troubled banks "need to understand what we are doing and we are merely being charitable when we talk about shareholders. Look, you have lost your money. If your capital is zero or negative, you no longer have a bank. That is the truth people do not want to hear.

"Somebody says he is speaking on behalf of shareholders. If we publish what we have, they will see; there is no capital, it's been gambled away - that is the truth. But we're trying to have discussions so that the shareholders would still have something," he stressed.

According to Sanusi: "For me, far more important than who owns the bank is that a bank performs its functions and performs the functions well.

"If a Nigerian is going to own a bank and at the end of the day, your money is not safe or if he is going to take your money and deploy that money to areas that would not benefit the economy, I would rather have a foreigner who would build the economy.

"Look, this banking problem may cost us as much as N500bn or N700bn, I do not know yet.

"For me, if there is a foreign institution that is determined to set up shop and promote economic development in Nigeria, I would support it. That was the essence of amending the law to allow for foreign ownership. That is very different from saying I have gone to look for foreigners to buy the troubled banks," he added.

Regions : Africa

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