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Banking crisis: two foreign investors back out, three ask for time

by Business News Report

By Omoh Gabriel
Indication emerged yesterday that some of the foreign investors approached by the CBN to take equity stake in the five banks it bailed out two weeks ago have backed out saying that the investment vehicle is controversial. While two of the foreign investors have turned down the offer, three are asking for more time to study the situation. It was learnt that those who withdrew their expression of interest were foreign investors pencilled down for Intercontinental and Afribank.
A pre-selection exercise in July by the apex bank had shortlisted groups of foreign investors representing Nigerian businessmen and politician with a view of using them to enter the Banking industry. At last weekend’s London Show, CBN had invited the investors to the meeting and subsequently held private sessions with them individually in London regarding acquisitions of the affected banks.
Two of the investors it was gathered last night lined up for Intercontinental Bank and Afribank eventually declined on the strength of the advice of their Missions here in Nigeria, and the counsel of their Foreign Ministries which qualified the unfolding actions of the CBN Governor as “controversial”.
The other three earmarked for Oceanic, FinBank and Union Bank requested for more time to make more consultations since their home countries were equally sceptical and advised against it.

But the CBN Governor Sanusi Lamido Sanusi has denied that the CBN went to London in search of foreign investors. Sanusi said that the CBN has no immediate plan to sell the affected banks to either local or foreign investors.
However on Friday CBN Governor Sanusi Lamido Sanusi said in London that the apex bank was ready to sell Union Bank, Intercontinental, Oceanic, Afribank and FinBank, 100 per cent to foreign investors. But one of the foreign investors had alleged that a pre-selection of the foreign investors was done by the CBN in July even before the announcement of August 14. He stated that the CBN team was meeting with each of those pre selected foreign investor whom he described as representing the interest of some powerful political power brokers in the country.
Sanusi who was quoted by Reuters while speaking in London at the conference the CBN governor called to reassure counter-party banks and foreign investors about the bailout said that he would not “stand in the way of any foreign banks taking a 100 per cent stake in the five Nigerian institutions”. The CBN also said that the five banks will be run as going concerns until new investors can be found to recapitalise them.
According to Reuters , the CBN governor said that “The banking sector is key to Nigeria’s economic prospects and that the nation will see economic growth of five percent this year, rising to double-digit rates from 2010 as its banking sector strengthens again after a $2.6 billion bailout.
Addressing international banks, lenders and rating agencies in London, Sanusi said that Nigeria economy was likely to expand 5 per cent in the second half of 2009 after growing at a similar pace between January and June. “I have no doubts that by 2010-2011 we will be looking at double digit growth in Nigeria. We were growing at 6 per cent without electricity, without peace in the Niger Delta,” Sanusi said, referring to unrest in the country’s oil heartland. “We are a country of 150 million people, but with only 23 million bank accounts. So there is a lot of room for growth.”
The Central Bank two weeks ago injected N420 billion into five banks and sacked their senior management, saying lax governance had left them so weakly capitalised that they posed a systemic risk.
Sanusi’s bailout, just two months after he took office at the helm of the CBN, shocked corporate Nigeria and initially panicked financial markets, sending the naira currency lower and triggering a stock market sell-off. S&P cut Nigeria’s speculative sovereign long-term foreign currency credit rating one notch to B-plus from BB-minus last week, citing the costly bank bailout and falling oil revenues.
It will be recalled that on March 23 this year Vanguard reported that Anti consolidation forces have regrouped with the hope of dissembling the banks and forcing a take over of the top five banks in the country. The grand plan by the group is to cause panic and uncertainty in the industry and make the target banks look unsafe for depositors. Their aim, Vanguard gathered, is to cause loss of public confidence in the banking industry and compel the Federal Government to move in by injecting funds. Further, they ultimately plan to instigate government to take equity holdings in the targeted banks.

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