Nigerian Bank Nigeria Bank PHB Plc – Nigeria May Take Year To Sell Banks No Shotgun Sanusi Says

Source Businessweek: Vincent Nwanma, 11 February 2010

Nigeria’s central bank will avoid any “shotgun” sale of rescued lenders and may take the rest of the year to complete deals with prospective international buyers. “It is not a shotgun marriage, these things happen as they come,” Governor Lamido Sanusi said in an interview in the commercial capital, Lagos. The process may take until the end of the year, Sanusi said.

Sanusi, who replaced Chukwuma Soludo as Central Bank of Nigeria governor in June, replaced the chief executives of eight lenders in August and September. He injected at least 620 billion naira ($4.13 billion) into 10 banks after bad loans made to stock speculators caused toxic assets to soar as much as $10 billion, according to estimates by New York-based research firm Eurasia Group.

Sanusi said in October the central bank will invite foreign institutions to take stakes in the 10 lenders and will limit domestic firms to a 20 percent stake. The central bank also extended a guarantee on interbank borrowing until the end of this year.

South Africa’s financial companies have led the approach from foreign buyers. Standard Bank Group Ltd., FirstRand Ltd. and Old Mutual Plc said in January they were interested in buying stakes in the lenders. The central bank aims to conclude some of the sales “by April or May,” Sanusi said.

‘Restoring Confidence’

Bank stocks, which led a 34 percent plunge last year in Nigeria’s All-Share Index, are rebounding this year. Nigeria’s benchmark index has gained 11 percent in 2010. Lenders comprise at least 40 percent of the country’s bourse.

The intervention in the country’s banking industry is “restoring confidence,” Sanusi said. “If banks are stable and making good profit, their stocks will go up.”

The quality of information on the bailed-out institutions has been improved by their new management, and those interested in buying them will be given access to data, he said.

The 10 banks, which all failed a central bank audit, will need to repay their loans through a proposed new government agency known as the Asset Management Company, according to a bill going before lawmakers.

“By all indications, we will get approval for the bill this February,” Sanusi said. “As soon as we have the AMC bill, we will proceed to deal with the toxic assets and we expect all other banks to pay through the AMC.”

The rescued banks are Afribank Nigeria Plc, Finbank Plc, Intercontinental Bank Plc, Oceanic Bank Plc, Union Bank Nigeria Plc, Bank PHB Plc, Spring Bank Plc, Wema Bank Plc, Unity Bank Plc and Equatorial Trust Bank Plc. Equatorial has repaid its 30 billion-naira loan, Sanusi said.

The central bank plans to introduce rules restricting lenders from investing depositors’ funds in non-banking operations including private equity, Sanusi said. “We have to look at the total operation of the banks,” he said.

Nigerian Bank Nigeria Bank PHB Plc, Central Bank Of Nigeria, Equatorial Trust Bank Plc, Finbank Plc, Intercontinental Bank Plc, Oceanic Bank Plc, Spring Bank Plc, Union Bank Nigeria Plc, Unity Bank Plc, Wema Bank Plc