A Review of the Nigerian Energy Industry

Moroccan bank, Skye, Fidelity bid for Mainstreet Bank

Palestinian whose house was destroyed during Israel's offensive, shows money distributed by Hamas in Jabalya25 September 2014, Lagos – A Moroccan bank, Skye Bank Plc and Fidelity Bank Plc are among the top seven shortlisted as potential buyers of Mainstreet Bank, top officials close to the bidding process revealed on Wednesday.

The Managing Director, Asset Management Corporation of Nigeria, Mr. Mustafa Chike-Obi, had told our correspondent two weeks ago that AMCON advisers had shortlisted seven potential buyers for Mainstreet Bank. He, however, declined to mention their names.

But sources close to the transaction disclosed to our correspondent on Wednesday that aside the Moroccan bank, Skye Bank and Fidelity Bank were among those eyeing Mainstreet Bank, while the remaining four bidders included a consortium of local buyers being backed by foreign financiers.

One of the sources said, “The Moroccan bank is not likely to go ahead with the bidding process because it is no more showing interest for whatever reasons best known to it. But Skye, Fidelity and other consortia are firmly in the race.

“One of them has submitted a bid of over N100bn but nobody knows who may win the bid, because a number of parameters are involved. It is too early to predict anything.”

The latest development came barely two weeks after AMCON announced Heritage Bank as the preferred bidder for Enterprise Bank.

Enterprise Bank and Mainstreet Bank are two of the three nationalised banks created after the 2009 banking crisis. Keystone Bank is the third lender.

They were created from the ashes of defunct Spring Bank, Afribank and Bank PHB, which were taken over by AMCON after they failed to meet the Central Bank of Nigeria’s recapitalisation deadline.

The CBN had in the wake of the 2009 banking crisis established AMCON, a bad debt manager, to buy off non-performing loans from banks’ books.

The Heritage Bank-sponsored HISL had on September 11, 2014 emerged as the preferred bidder for Enterprise Bank, while Fidelity Bank emerged as the reserve bidder.

On Friday, the bank paid the initial deposit of 20 per cent of the bid price and is expected to pay the balance next month in line with the purchase agreement it signed with AMCON.

Skye Bank and Fidelity Bank participated in the bidding process for Enterprise Bank, with Fidelity expected to emerge as the preferred bidder should Heritage Bank fail to pay the 80 per cent balance of the bid price.

“Some of the banks submitted bids for both Enterprise Bank and Mainstreet Bank. I think the CBN may not allow any of them to buy more than one bank. But I think some of them did so to boost their chance, hoping that if they won one, they would drop or opt of the other one,” a top banker, who chose to speak under the condition of anonymity because of the sensitivity of the bidding process, said.

Chike-Obi had said the corporation would not disclose the name of any of the potential buyers other than to announce the preferred and reserved bidders after the process.

He had told our correspondent in an exclusive interview that AMCON had reduced the 23 investors lining up to buy Mainstreet Bank to just seven.

He also said the corporation would name the successful buyer of Mainstreet Bank on October 31.

“With Mainstreet Bank, we started with about 23 prospective buyers and I believe that we are down to seven prospective buyers now,” he had said.

AMCON had commenced the sale of Enterprise Bank and Mainstreet Bank last year and early this year, respectively.

The AMCON boss said the sale of Keystone Bank would commence later.

The CBN had on August 5, 2011 revoked the operating licences of Afribank, Spring Bank and Bank PHB, which it said did not show enough capacity and ability for recapitalisation.

In their place, the CBN, through the Nigerian Deposit Insurance Corporation, established three bridge banks and transferred the assets and liabilities of the affected banks to the bridge banks.

Mainstreet Bank took over the assets and liabilities of Afribank; Keystone Bank assumed the assets and liabilities of Bank PHB; while Enterprise Bank took over Spring Bank.

Consequently, AMCON acquired from the NDIC the three bridge banks and injected N679bn into them to meet the minimum capital base of N25bn and the minimum capital adequacy ratio of 15 per cent.

Mainstreet Bank received N285bn; Keystone Bank, N283bn; and Enterprise Bank, N111bn.



– The Punch

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