* Rescued banks running high operating losses
* Central bank blames "vested interests" for blocking deals
* Warns of dire consequences if banks fail
By Nick Tattersall and Chijioke Ohuocha
LAGOS, June 13 Nigeria's central bank has warned
that eight lenders rescued in a 2009 bailout are in a "grave
situation" as their operating losses mount and that vested
interests risk derailing plans to recapitalise them.
The central bank injected $4 billion into the lenders, found
to be dangerously undercapitalised, in 2009. A state "bad bank"
(AMCON) has brought them back to zero shareholders funds while
new investors have been sought to recapitalise them.
Central Bank Governor Lamido Sanusi said court injunctions
sought by minority shareholders risked blocking deals between
four of the bailed-out lenders and new investors.
"The central bank cannot afford to keep the interbank
guarantee in place indefinitely, whereas it is solely by this
guarantee that the rescued banks have been able to keep going,"
Sanusi said in a statement issued on the central bank Website.
"The cost to the nation, if the banks continue to operate
without capital, is incalculable. The risk to the financial
system, if these banks fail, cannot be afforded," he said.
Sanusi said he was committed to protecting depositors and
creditors, pointing out that neither had lost savings or loans
so far during the bank crisis.
The central bank has given the lenders to the end of
September to reach recapitalisation deals with new investors or
face liquidation if they refuse to accept funds from AMCON,
which would effectively mean nationalisation. [ID:nLDE74U22M]
Shareholders in several of the lenders have gone to court to
try to scupper deals which they see as being forced on them on
unfavourable terms without consultation. [ID:nLDE75511D]
Four of the banks -- Afribank AFRIBAN.LG, Finbank
(FIRSTIN.LG), Intercontinental Bank INTERCO.LG and Union Bank
(UBN.LG) -- have already signed memoranda of understanding (MOU)
with new investors.
Two more -- Bank PHB (PLATINU.LG) and Oceanic Bank
OCEANIC.LG -- have held talks with potential suitors but have
been unable to agree commercial terms.
Sanusi said the small number of shareholders seeking to
block the process held stakes worth "just a fraction" of the
banks' overall shares and that they appeared to be acting "at
the instance of some vested interests".
"The central bank has been advised that four MOUs and the
recapitalisation to complete the restoration of the banks ...
have been effectively blocked by ex-parte orders of injunction
obtained to stop the process," he said.
The central bank could file an application to set aside the
injunctions enabling it to continue the process, lawyers said.
Sanusi said the eight rescued banks remained technically
insolvent, with negative asset values in the hundreds of
billions of naira last December, before AMCON exchanged their
non-performing loans for government-backed bonds.
Intercontinental had the highest negative shareholders'
funds at 330 billion naira ($2.1 billion), up from 260 billion
just after the bailout in September 2009. Afribank's negative
asset value widened to 260 billion naira from 107 billion.
"The situation will continue to worsen as long as the hole
in the balance sheet of these banks, which was created by
mismanagement and outright theft, is not filled with capital,"
For a Factbox, click on: [ID:LDE75C1FS]
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(Writing by Nick Tattersall; Editing by Louise Heavens)