AMCON Rebrands Nationalised Banks

Mustafa Chike-Obi, AMCON MD

By Kunle Aderinokun and Obinna Chima


As bank customers and the public gradually get used to the fact that Afribank Plc, Bank PHB Plc and Spring Bank Plc have ceased to exist as banks and going concerns, the Asset Management Company of Nigeria (AMCON) has rebranded the three bridge banks it acquired from the Nigeria Deposit Insurance Corporation (NDIC) on Saturday.

The Securities and Exchange Commission (SEC) has, in the meantime, suspended trading in the shares of the nationalised banks indefinitely while AMCON has appointed new boards and CEOs for the three financial institutions.

Following the failure of the shareholders, boards and management to recapitalise Afribank, Bank PHB and Spring Bank, the Central Bank of Nigeria (CBN) withdrew the licences of the three banks last Friday and handed them over to NDIC.

NDIC, in turn, created bridge banks as temporary holding companies to assume the assets and liabilities of the failed banks while facilitating their resolution.

The three bridge banks that emerged from the carcasses of Afribank, Bank PHB, and Spring Bank were Mainstreet Bank, Keystone

Bank and Enterprise Bank respectively, which were then acquired by AMCON in a formal ceremony after the execution of a subscription agreement that will enable AMCON to inject N678 billion into the new banks.

With the banks’ acquisition, Mainstreet, Keystone and Enterprise Banks will open for business today to their customers under new chief executives and management teams.

Providing further insight into their acquisition, the Managing Director/CEO of AMCON, Mr. Mustafa Chike-Obi, informed THISDAY that it was important for the public and customers to understand that what AMCON acquired from NDIC were the bridge banks and not Afribank, Bank PHB and Spring Bank whose licences had already been revoked.

He said customers’ deposits in the three new banks remained safe and there was no reason for panic withdrawals, since all their assets and liabilities had been assumed by the bridge banks, which were sold to AMCON.

“Mainstreet, Keystone and Enterprise Banks are going concerns and have banking licences to operate, so no money will be lost. AMCON shall retain ownership of the three new banks for three years until new owners are found for them to take them over,” he stated.

In this stead, an official of CBN confirmed that AMCON had commenced the rebranding of the three banks, which started last weekend with the change of name plates at their head offices and 24 of their branches in some major cities nationwide.

He disclosed that the banks’ major branches had already been rebranded in Lagos, Kano, Kaduna, Aba and Port Harcourt, adding that the change of their name plates would continue in the weeks ahead.

The official explained that rebranding was necessary to put a stamp of finality on the defunct banks, and that the exercise would include the rebranding of cheque books, letterheads and other official documents of the new banks that had risen from their ashes.

The CEOs will be required to meet with key stakeholders and bank customers to allay concerns over their deposits and the safety of the banks.

The new boards and managements, each having seven individuals as members, are chaired by Mr. Moyo Jacob Ajekigbe (Keystone), Malam Falalu Bello (Mainstreet) and Mr. Emeka Onwuka (Enterprise).

All the three are former bank CEOs: Ajekigbe (FirstBank), Bello (Unity Bank) and Onwuka (Diamond Bank).
AMCON said the boards and managements of the three banks had been approved by the CBN.

Keystone has Mr. Oti Ikomi as Managing Director and Mr. Shehu Abubakar, Mr. Demola Adewale, Mrs. Yvonne Isichei, Dr. Shehu K. Mohammed and Mr Raphael Ereyi as Executive Directors.

Mainstreet has Mrs. Faith Tuedor-Matthews, who recently resigned as the Deputy Managing Director of United Bank for Africa (UBA) Plc, as Managing Director. She will be supported by Mr. Kola Ayeye, Mr. Abubakar Sadiq Bello, Mr. Bolaji Shenjobi, Mr. Anogwi Anyanwu and Mr. Roger Woodbridge as Executive Directors.

For Enterprise Bank, Mr. Ahmed Kuru is the Managing Director, while Mrs Louisa Olalokun, Mrs Nneka Onyeali-Ikpe, Mr. Aminu Ismail, Mr. Niyi Adebayo and Mr. Audu Kazir are Executive Directors.

AMCON said: “The newly appointed boards are entrusted with the mandate to manage these banks along best commercial practice to compete effectively in the Nigerian banking sector and provide quality service to customers.”
AMCON also disclosed that the CBN had granted the same interbank guarantee it extended to the banks that had signed Transaction Implementation Agreements (TIAs) until December 31, 2011.

The corporation assured Nigerians that the banks were fully capitalised, strengthened and well positioned for future growth.
It said: “Depositors are again assured that their deposits are safe, and employees are also assured of seamless continuity of business operations and job functions.”
SEC said yesterday that it had suspended trading in the shares of Afribank, Spring Bank and Bank PHB, following their nationalisation.

SEC also approved a technical suspension on the trading of Finbank, Intercontinental, Oceanic Bank and Union Bank shares, pending the completion of agreed recapitalisation deals, according to a Reuters report.
A technical suspension means that trading on the shares can continue without any change in price.

Following the outcome of an industry-wide special audit undertaken by CBN and NDIC in 2009, the CBN had intervened in eight banks and sacked their CEOs and executive directors.

The banks were discovered to have been mismanaged by their boards and management, resulting in negative shareholders’ funds and inadequate liquidity.

In a bid to save them, CBN injected N620 billion in the form of Tier II capital and provided interbank credit guarantees to enable them to remain in business. CBN also appointed interim CEOs and executive management teams for the eight banks.

The affected banks were: Oceanic Bank International Plc, Union Bank of Nigeria Plc, Finbank Plc, Afribank, Bank PHB, Equatorial Bank Limited, Intercontinental Bank Plc and Spring Bank Plc. Two other banks – Wema Bank Plc and Unity Bank Plc – were given timeframes within which their shareholders and management were expected to recapitalise them.

As the dust settled, the eight banks were required to recapitalise through CBN-supervised sales to new investors that would have injected capital into the institutions.

But the effort to sell some of the banks to new owners was blocked by shareholders and some of their sacked CEOs who instituted court cases to frustrate the CBN.

Even after the cases were dismissed by the courts for lack of merit, some bank boards, especially that of Afribank, proved recalcitrant and made what was considered to be costly mistakes of rejecting two bids from Vine Capital, a private equity firm, and Fidelity Bank Plc.

CBN then gave the banks till September 30 to wrap their recapitalisation with prospective bidders, failing which they would be liquidated or nationalised.

This galvanised the boards of Finbank, Intercontinental, Oceanic and Union Banks to speed up negotiations on their acquisition, thus paving the way for the execution of binding TIAs with bidders for their banks.
However, Afribank, Bank PHB and Spring Bank, which failed to heed CBN’s warning, lost their licences to operate as banks and were handed over to NDIC last Friday.

BOXED
UNDERSTANDING WHAT HAPPENED…
Step 1: CBN revokes licences of Afribank, Bank PHB and Springbank because of their inability to recapitalise.
Step 2: NDIC takes over the banks and creates three “bridge banks” to run them on a temporary basis, possibly three years.
Step 3: AMCON acquires the “bridge banks” and will inject the needed capital to keep them afloat. Banks now owned by FG.
Step 4: The banks will be privatised sometime in the future as government divests its holdings.

SOURCE: ThisDay Newspaper 8 August 2011.  

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