Monday 30 August 2010
- Culled from The PunchFinancial analysts have
expressed divergent views on the sale of rescued banks to either local or
foreign bidders.Analysts, who spoke to
our correspondent on Saturday, differed in their opinions, as some of them said
that local bidders should be considered over their foreign counterparts.
However, others advocated for foreign investors.Analysts, who spoke in
favour of local bidders, said that the foreign bidders should be considered due
to their capacity for enhanced capital support, technical competence to
turnaround the rescued banks.The Central Bank of
Nigeria, last week, announced that it had received bids for four of the nine
lenders rescued in a $4bn bail-out last year.Sanusi had said that two
foreign institutions were involved in the bidding process as well as several
local banks and private equity firms in partnership with foreign banks.According to a financial
analyst in Finawell Capital Limited, Mr. Tunde Oyekunle, the local banks, which
are currently facing serious liquidity problems as a result of the economic
downturn, may find it difficult to adequately turn around the banks.He said, â€The total
assets of most local banks have dwindled drastically due to the economic
downturn. Most local banks are currently facing enormous internal and
operational challenges, which are taking most of their resources and may make
it tough for them to turnaround a distressed bank.â€Oyekunle added that the
decreasing level of profitability in the banking industry might affect the
ability of local banks to achieve the desired turnaround of the rescued banks.However, the Managing
Director, Mutual Alliance Investments & Securities Limited, Mr. Olakunle
Ologun noted that the Nigerian buyers should be given the right of purchase
before the foreign bidders.He said, â€The country has
moved from the era of arbitrariness to due process. Due process should be
followed in selling the banks. However, Nigerian buyers should be given the
right of first purchase over their foreign counterparts.â€This should entail
seeking the views of the shareholders in an extra-ordinary general meeting or
annual general meeting. They should allow the shareholders the choice to sell
or put in additional equities. In this situation, stakeholders will be more
assured of no element of bias or ulterior motive behind the sale.â€He noted that the results
posted by some of the rescued banks recently, indicated an improvement in their
balance sheet position. He added â€The CBN should give the banks closer
monitoring to prevent derailment.â€On why the foreign
bidders should be considered before local bidders, Oyekunle added that they
could revive the banks with their technical and operational competence.He said, â€The foreign
bidders have good corporate governance. In addition, the foreign bidders will
likely have stronger financial strength to bail out the distressed banks, pay
all their debts and enhance the turnaround.â€The
analysts, however, said that the bidding process should be transparent and be
made to follow due process. They added that approval must be sought from
shareholders before any bidding or sale is be carried out.