By Peter Egwuatu & Providence Obuh
Shareholders and stockbrokers bared their minds on the recent purchase of bad loans of rescued banks by Assets Management Company of Nigeria (AMCON).

While shareholders expressed fears over the move by AMCON in buying the toxic assets of these banks, asking several questions such as : Whether AMCON has voting rights, rights to attend Annual General Meetings (AGMs) and take decisions. Some also asked whether AMCON has been empowered to dispose of transferred assets without seeking approval from original asset owners Does AMCON have the authority to force companies into receivership if they do not pay their debt and so on was part of the questions they have asked.

For the stockbrokers they praised AMCON for coming to their rescue by granting them relief on their margin loans. Nevertheless, the stockbrokers want to see what per cent AMCON will give to the stock broking firms or people involved in the margin facility.

Excerpts.
Mr. Boniface Okezie, Chairman, Progressive Shareholders Association of Nigeria (PSAN)

What is the position of shareholders in the rescued banks now that AMCON has bought the bad debt of the affected organisation in exchange for shares?

Well, we are just watching what will happen after AMCON has purchased the bad debt. At the moment both AMCON and CBN are not carrying the existing shareholders along. So there is nothing we can do rather that watch and see. The shareholders are just helpless at the moment because we don’t know the modalities and conditions with which AMCON is buying those toxic assets.

All we are reading from the paper is that AMCON will take up shareholding in the rescued banks from which they purchased bad debt especially the ten troubled banks.

Is AMCON going to have voting rights in these rescued banks after acquiring the shares

This is one of the questions that ABCON and CBN have to answer. I don’t really know the position because we are not being involved. Taking over the toxic assets in exchange for shares without our approval is already an offence. The shareholders ought to rectify such arrangement. Well lets watch what will happen whether they will just hold the shares and later offload them and exit or become part of the investors in the banks, only time will tell.

The President, Goodluck Journathan is suppose to call both CBN and ABCON to order. Now the rescued banks don’t have board members. It is CBN that the managing directors of these banks are reporting to. So how do you think the shareholders can influence the banks when there are no Board members. So what signals are they sending to foreign investors who are requesting to come and invest in these banks..

Are you saying that CBN wants to nationalise these banks?

Well, it could be exactly what they want. The CBN should come out to say its position. Nationalising these banks would be disastrous for this country. This is because our government in the past has not done well in running any business venture. When the issue of AMCON came on board, we heard that they are coming to help the rescued banks recapitalise.

So from my understanding AMCON is also a recapitalisation vehicle that can help the banks recapitalise by injecting fresh fund into them in exchange for shares. It has not done this yet, but it is one of the things it can do. There are several unanswered question in the AMCON saga which investors and other Nigerians are seeking answers from CBN. Is AMCON trying to nationalise the banks or resuscitate them?

Is it going to convert the debt instrument into ordinary shares in which it may become a core investor in the affected banks and hold sway with block votes or will it take preference shares in which it will have first right to dividend sharing and no voting rights at Annual General Meeting ( AGM) and the appointment of board and management of the banks? If it takes preference shares what stop it in the longer term of 10 years from converting them into ordinary shares.
Mr. Tunde Oyediean, Managing Director, Deloy Consulting

What is your position on AMCON taking over the shares of the rescued banks?

“AMCON as you know was established to remove toxic assets, i.e non performing loans from the bank of the nine rescued banks. The reason for AMCON establishment was to ensure that banks are recapitalised and ensure loans acquired, are well managed.

Margin is given out to some people, AMCON made good the loan margin arrangement, November 2010, it brought out amount to be given to rescued banks, did valuation of 60 days of stock price which ended 15th November 2010 plus 60 per cent premium.

If you look very well from 15th November, the market was going up as a result of the deadline, mark up date that they will use as bases of valuation. By December 30th 2010, they made good their promise by providing liquidity for the rescued banks based on the valuation of the non performing loan.

“AMCON called the banks on the 30th December, had meeting with them and collected their non performing loan and gave them bond to cover the non performing loan based on valuation.

When the healthy banks saw that it was a good value, most of them now agreed to give their non performing loan to AMCON. So far AMCON have taken care of the rescued banks first.

Given what you have said, is like the stockbrokers are not concerned with what happens to shareholders?

“Well, I am speaking for the brokers, so the position of stock brokers is that we have pledged much , to take up the margin facility. In fact, stockbrokers brought in one_ third of the margin facility collected from banks, what then happens to the one_third of the margin facility collected, we want to see what per cent will AMCON give to the stock broking firms or people involved in margin facility.

These are the posers that are unclear, this is what the brokers are facing, causing shortage in their capital requirement.
Mr. Sunny Nwosu, National coordinator of the Independent Shareholders Association of Nigeria (ISAN)

What is your position on AMCON taking over the shares of the rescued banks?

“AMCON would only become a new instrument of colonisation to investors in the stock market contrary to the believe in some quarters that it will bring the market back to liquidity. Of course liquidity may return to the market, but will they return the banks to us.

The company ‘s focus is to take over the banks which is a form of nationalizing the institutions.

AMCON bill is said to be designed to rescue the banks from the weight of non-performing loans. If that happens, they are going to take substantial equity from the banks and when they take up about 20 to 30 per cent, it will amount to bulk share which will automatically give them the power to call the shots against the views of the owners of the institutions, because it is not really easy for the shareholders to come together to acquire 30 per cent equity as a single instrument”.

My fear is that AMCON, the Central Bank of Nigeria (CBN), would through its proxy, take control of the banks. We will be reverting to the years when you just tune your radio or television and hear that the board of a bank has been changed with civil servant who do not grow the economy”.

What would be your advice to the government regarding AMCON’s operation?

“AMCON is an instrument of colonization because these banks are being nationalised. What am saying is that these banks are private enterprise and that CBN should extend their guarantee and allow these banks sufficient time to recapitalise.

Nevertheless, mu opinion is that the overriding purpose of AMCON is clearly to return confidence to the banking system. So my advise is that they should carry all the stakeholders along. What is happening now in the market place is that a number of investors as well as shareholders are still not clear of the real intention of AMCON. Some of its activities are still shrouded in secrecy. In a reform where the slogan is good corporate governance and transparency it is in the interest of the market and the economy for policy direction to be very clear to all”.

Late Chief Aderemi Oyepeju, Chairman, Ibadan Zonal Shareholders Association of Nigeria. He bared his mind on the burning issue before his demise.

What is your opinion on the issuance of bonds to rescued banks in exchange for shares?

It is a welcome development. That is what is happening in the global market. The AMCON has come to rescue the sick banks by buying up their toxic assets. What do you think would have happened if AMCON had not come in place, probably the banks would have gone under and we the ordinary shareholders would have completely lost every thing. But now that we have a body like AMCON coming to buy these bad assets, we should be happy at least. With time we shall begin to once again to reap from our investment.

What will be the position of shareholders if eventually AMCON takes over the banks?

Well, we don’t have money to rescue these banks. What do you think we can do than to watch and see. However, I don’t expect them to have stake in the banks, but it turns out to be so what can we do. They said he who plays the piper detects the tune. They are coming with their money to buy these assets so I wont be surprise if they attend AGM to take decisions on how these institutions would run.