Business
Shareholders Want Core Investors For Rescued Banks
Following the statement by the Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi, that Shareholders were free to recapitalise the rescued banks, some shareholders have called for core investors for the banks.
The President of the Association for the Advancement of the Rights of Nigeria Shareholders, Dr. Farouk Umar, has advised shareholders to support moves to get core investors into the rescued banks, in a bid to salvage them and prevent them from being liquidated by the apex bank.
Umar, who addressed capital market journalists on the state of the rescued banks in Lagos on Wednesday, also appealed to the shareholders to withdraw the law suits they instituted against the CBN, because of the reform in the banking industry and give room for the smooth recapitalisation of the affected banks.
Speaking on the recapitalisation of the banks through core investors and the implication of the signing into law of the Asset Management Corporation of Nigeria Bill by President Goodluck Jonathan, he noted that the need to allow core investors to buy into the banks had become imperative, because the N600bn the CBN injected into the eight rescued banks had become inadequate for them to continue to remain in business.
He noted that another audit that was carried out in the banks after the first one by the apex bank and the Nigerian Deposit Insurance Corporation, showed that the level of non-performing loans was more than the figure recorded during the first audit.
Umar added that the problem was compounded by the fact that the level of loan repayment that was initially high because of the involvement of the EFCC, had slowed down over time.He said the shareholders should consider the option of getting strategic investors, which the CBN had suggested to shareholders and the banks, so that the banks could recapitalise either through rights issues or public offers.
According to him, the only snag is that the existing holding of shareholders will be diluted, as fresh shares will be issued for the new strategic investors.
He added that this would improve the banks’ negative shareholders’ funds and the value of the investments of the shareholders.