BY MICHAEL EBOH
The Chartered Institute of Bankers of Nigeria, CIBN, has called on the regulators in the financial industry to ensure that due process is followed in the ongoing recapitalization, merger and acquisition deals in the banking sector.

Speaking in Lagos, President of the CIBN, Mr. ‘Laoye Jaiyeola expressed support for the actions of the Central Bank of Nigeria, CBN, saying, “What is important at this time is ensuring that the regulators are following the laid down process required to resolve the issues.

According to him, the banks, as required by law are now ready to lay the various scheme documents before shareholders at duly convened meetings where such would be discussed and adopted with, or without amendments, before becoming effective.

Jaiyeola expressed confidence that the ongoing reforms in the banking sector would ensure a stable industry, this is even as shareholders of the remaining four rescued banks prepare for court-ordered meetings.

Jaiyeola, who is also chief executive of Kakawa Discount House Limited, continued, “From day one, CIBN have always supported the reforms, as long as it would bring about a safe and sound banking system, protect the interest of our members, depositors, the industry and the economy in general.”

Jaiyeola said the entire recapitalisation process, which would bring about a win-win situation for stakeholders, would become more stable and significantly de-risked.

He stated further, “People would have learnt lessons. Shareholders are advised to put less pressure on the Board and management of their banks to do anything undesirable.

He expressed hope that there would be less speculative banking in the country, even as he challenged the banks themselves to engage in massive human capital development to drive the fast-changing operating environment.

Shareholders of Equitorial Trust Bank has since approved its acquisition by Sterling Bank Plc; the remaining four banks will be holding court ordered Extraordinary General Meetings, EGM, to seek shareholders’ approval for the Transaction Implementation Agreements, TIA and scheme of mergers entered into by their respective board of directors starting from Monday, September 26 with that of Intercontinental Bank who will be meeting to approve its N50 billion business combination deal with Access Bank.

Finbank’s court-ordered Extra-ordinary meeting is slated to hold, September 29; while that to approve the bid by African Capital Alliance consortium to invest a total of $750 million into Union Bank in exchange for a 60 per cent stake comes up on September 30, 2011.

Lending support to this market posture was the decision last week by representatives of 25 of the 30 registered shareholder groups who met in Lagos, pledging to vote in support of the various recapitalisation deals that would bring an end to the nation’s banking crisis that started after the August 14, 2009 intervention by the Central Bank of Nigeria (CBN) following the outcomes of the stress test jointly conducted in June 2009 by examiners from CBN and the Nigeria Deposit Insurance Corporation (NDIC).

A total of nine banks- Afribank, Bank PHB, Equitorial Trust Bank, Finbank, Intercontinental, Oceanic, Spring, Union and Wema, failed the CBN/NDIC stress test outrightly, across three parameters- liquidity, capital adequacy and corporate governance.

They benefited from a total of N620 billion CBN rescue package, in addition to an inter-bank guaranty with the backing of the Federal Government to enable them remain going concerns and to prepare them for acquisition, while executive managements of eight of the banks were removed and replaced by CBN appointed managers.

Wema Bank Plc was however spared, having just been acquired by new owners, who took over, injecting new management in the process. The new core investors, SW-8 Investment Limited were therefore allowed to seek fresh capital within one year.

Three others – Afribank, Bank PHB and Spring Bank, were on August 5, 2011, nationalised after the CBN deemed them unable to provide sufficient evidence of their ability to meet the September 30, recapitalization
deadline set by the apex bank.