By Peter Egwuatu
Ahead of the sale of the last nationalised bank (Keystone Bank Limited ) by Assets Management Corporation of Nigeria (AMCON), fresh facts seem to have emerged as shareholders have called on the incoming government led by President-elect, General Mohammadu Buhari to revisit the issue of the three nationalized banks, stating that the exercise was not transparent and characterized by corruption.
Meanwhile, AMCON’s spokesperson, Mr. Kayode Lambo confided in Financial Vanguard that the sale of Keystone Bank will commence this year, 2015 contrary to earlier 2014 speculated. He said: “The corporation will start the process of selling the bank with the appointment of financial advisers and will be fast-tracked. So it is likely that the sale may be completed between October and November 2015.” Recall that AMCON has so far sold Mainstreet Bank and Enterprise Bank to Skye Bank and Heritage Bank respectively.
In an exclusive chat with Financial Vanguard, the Chairman, Progressive Shareholders Association of Nigeria, PSAN, Mr. Boniface Okezie, said, “We thank God that Keystone Bank, whose case is still in court over nationalization has not been sold yet. We have more facts on this issue and we want proper investigation on it by the new government. Also, investigation had shown that one of the reasons why retail investors had shown apathy to the Nigerian stock market since the meltdown in 2009 was because of the issue of nationalized banks.
The retail investors suffered the loss of their investment in these banks. If the new government wants increased participation of local investors in the market, then it should investigate the issue of the nationalized banks.” Continuing, he said, “If the issue is investigated properly, the government will discover discrepancies in the handling of the issue and it will be proper if the banks are returned to their former shareholders or in the worst situation, compensation be paid to the shareholders.
This step, if carried out would enhance confidence and engender the participation of local investors in the capital market. So we are using this opportunity to call on the incoming government to revisit the nationalisation of the three banks whose licences were revoked by the Central Bank of Nigeria, CBN and acquired by Nigeria Deposit Insurance Corporation, NDIC and then finally taken over by AMCON .
He contended that due process was not followed as the exercise was characterized by corruption, adding, “The nationalization of these banks amounted to unlawful and compulsory acquisition of our investment and is therefore unconstitutional, arbitrary, null and void. We have fresh facts at our disposal and we would like the new government to investigate this issue. Thank God, Keystone Bank has not yet been sold.”
Speaking as well on the issue of nationalized banks, Chairman of Nigeria Shareholders Solidarity Association, NSSA, Chief Timothy Adesiyan said, “Nationalisation of these banks is a big fraud and need to be revisited for true justice to prevail. According to him “Shareholders are not happy with the CBN when it forcefully nationalized three banks belonging to us. The question is, are the three banks doing well since they were taken over by AMCON? The answer is no.
Then, what is the essence of nationalizing them? We the shareholders of these banks were shortchanged and we would like the issue to be revisited and investigated because we like justice to prevail. When two elephants are fighting it is the grass that suffers.” Speaking on the issue, the National Co-ordinator, Independent Shareholders Association of Nigeria, Sir Sunny Nwosu said, “The establishment of AMCON was intended, ab initio, to re-rationalise banks and rape shareholders, the idea was an “empty boast geared towards shortchanging shareholders, to enable them give the banks to their friends.
The revocation of the operating licences of the banks was an illegal policy that had clearly showcased Nigeria as an unfriendly polity for sustainable business.” In his comment, National Co-ordinator, Proactive Shareholders Association of Nigeria, PROSAN, Mr. Taiwo Oderinde said, “It is a welcome development if the issue of the three nationalised banks is revisited.”
The shareholders have been crying and calling on the government to compensate the shareholders who were not carried along when it nationalised the banks. We cannot be responsible for the inactiveness of others.
In his response, Mr. Adebayo Adeleke, General Secretary, Independent Shareholders Association of Nigeria (ISAN) said “The previous CBN governor should be investigated by the Economic and Financial Crimes Commission (EFCC). He should be asked to account for how the three banks were nationalised without following due process. The former CBN Governor, Mallam Lamido Sanusi never followed due process to nationalize these banks.
The CBN had given September 30 for the banks to recapitalise but the investing public woke up on Friday to hear that the three banks have been acquired. Worse still, the following Monday, new managements, boards and new names were announced for the banks. When will Nigeria’s public officials learn to obey the law?” Why the rush to nationalise, especially for banks that are publicly quoted on the Nigerian Stock Exchange, NSE?”
It will be recalled that Keystone Bank , Enterprise Bank and Mainstreet bank, were totally restructured after a CBN audit showed their poor financial standing. The Asset Management Company of Nigeria, AMCON, has said it would be selling off Keystone, Enterprise and Mainstreet banks, in 2014.
The three banks, formerly known as Bank PHB, Spring Bank, and AfriBank were among the banks with infractions after the Central Bank’s audit in 2009. Their situations were beyond mere bailouts and they had to be totally restructured, refunded and nationalised, to save depositors’ funds.
AMCON was setup to revive and stabilise Nigeria’s banking industry through the purchase of Non-Performing Loans, NPLs, of the nation’s banking industry. The 2009 banking crisis in the country, which coincided with the global asset bubble, was huge, when compared to previous industry crises, according to finance experts. The crisis of solvency liquidity and confidence affected approximately 40 per cent of the total banking system. Financial firm’s reports reveal the financial cost of the intervention is now in excess of N5 trillion, aside shareholder values destroyed.
It will be recalled that some shareholders had taken AMCON to court and the case has yet to be finalized. At the last ruling, a Federal High Court in Lagos refused to dismiss a suit filed by some shareholders of the defunct Bank PHB Plc (now Keystone Bank) against the CBN, AMCON and three others over the forced acquisition of their shares.
While ruling on a preliminary objections filed by the defendants to challenge the jurisdiction of the court, Justice Mohammed Yunusa held that as shareholders, the plaintiffs have a say in the bank and that no arm of government can take away a citizen’s right to acquire or hold property; therefore, there can be no compulsory acquisition of the shares. The plaintiffs are challenging the alleged illegal transfer of their shares to Keystone Bank without compensation.
They are also demanding the sum of N38.6 billion from the defendants being “fair compensation” to them for the value of their investment in Bank PHB Plc. The shareholders are further asking the court for an order setting aside the alleged unlawful nationalisation, compulsory acquisition and expropriation of their investments in Bank PHB, and are seeking N20 billion as damages for the loss of value of their investments in Bank PHB.
The defendants in the suit are CBN, Keystone Bank, Attorney-General of the Federation and Nigeria Deposit Insurance Corporation (NDIC). The plaintiffs claimed that NDIC on August 5, 2011, wrote Bank PHB’s Managing Director informing him that the bank’s assets and liabilities have been transferred to Keystone Bank without any form of adequate compensation to the shareholders.
The plaintiffs are praying the court to declare that the action amounted to unlawful compulsory acquisition of their investment and is therefore unconstitutional, arbitrary, null and void. But the defendants in their preliminary objections to the suit, urged the court to strike it out for lack of jurisdiction. According to their lawyer, Kola Awodein, the shareholders did not bring the action properly before the court thereby robbing the court of the jurisdiction to hear it.