The Asset Management Corporation of Nigeria (AMCON) at the weekend disclosed plans to commence the process leading to the sale of Enterprise Bank Limited in the next 30 days.
This emerged, just as the corporation said that in conjunction with the Central Bank of Nigeria (CBN), it had outlined a comprehensive plan for the refinancing of its initial N5.7 trillion zero coupon bonds expected to mature from December 31, 2013 to October 2014.
The corporation, which disclosed this in a statement, also explained that the sale of Keystone Bank Limited and Mainstreet Bank Limited would follow sequentially, in order to ensure orderly and transparent transactions.
The process, which is expected to be concluded by the third quarter of 2014, according to AMCON, would lead to the full divestment of its shares in the three banks.
Enterprise, Keystone and Mainstreet Banks are wholly owned by AMCON. The corporation had acquired them in August 2011, after the intervention by the Nigeria Deposit Insurance Corporation (NDIC) and the CBN.
Enterprise Bank was created from the carcass of the defunct Spring Bank, while Keystone Bank Limited and Mainstreet Bank Limited were created from the defunct Bank PHB and Afribank respectively.
Enterprise Bank remains the only bank among the bridged banks whose financial reports as at December 2012, has been made public.
AMCON’s Chief Executive Officer, Mr. Mustapha Chike-Obi, had in the recent past assured Nigerians that the process leading to the sale of the three banks would be transparent.
Although Chike-Obi could not be reached to explain the rationale for selecting Enterprise Bank among the three, a banking sector analyst explained that the choice of the bank was because it is the smallest and cleanest in terms of loans book.
“So anything that can be learnt from the sale of Enterprise Bank can be applied to the sale of Keystone Bank and Mainstreet Bank,” he added.
In Enterprise Bank’s recently released results for the year ending 2012, its gross earnings increased significantly to N40.4 billion, compared to earnings of N10.5 billion in the five-month period ended 2011.
The bank also realised a profit before tax (PBT) of N11.3 billion in 2012, as against a loss of N5.2 billion recorded in the five-month period it operated in 2011.
Also, its customers’ deposits grew from N162.6 billion in 2011, to N208.4 billion in 2012, just as its total assets climbed from N198.5 billion as at the end of 2011 to N261.1 billion in the year under review.
Shedding more light on the planned bond refinancing, AMCON explained that due to the great progress made in its debt recoveries and restructuring, as well as the “extraordinary cooperation of the Deposit Money Banks (DMBs) in fulfilling their commitments to the Financial Sector Resolution Fund- the Sinking Fund, AMCON is now able to retire about N2 trillion of its bonds during 2013 and 2014 and refinance approximately N3.6 trillion.”
This, according to the “bad bank” would enable it reduce its bonds liabilities by 35 per cent, which it stressed “is well ahead of schedule”.
The corporation had issued a three-year tenured zero coupon bonds with a principal amount of N3.9 trillion and a face value of N5.7 trillion which had enabled it to fulfil its mandate of acquiring Eligible Bank Assets (EBA) and also in recapitalising the banking system. This helped to restore stability in the financial system.
It added: “AMCON intends to repay all holders of Series 1 to Series 4 in December 2013, through the payment of cash and liquidity status qualifying instruments held by the corporation.
“The redemption and refinancing will be in a manner consistent with efficient and effective macroeconomic stability in general and ensuring no monetary policy dislocation.
“AMCON intends to refinance N3.6 trillion of bonds in a bilateral agreement solely with the CBN on mutually agreed terms. There will consequently be no other public or private holders of AMCON bonds.
“Since the source of repayment will be AMCON recoveries and the sinking fund, the CBN which regulates and supervises all contributing institutions, including AMCON, is well placed to ensure that AMCON obtains maximum recoveries and that all banks continue to contribute as agreed.”
With respect to the retirement of AMCON’s bonds, the analyst who spoke with THISDAY said: “The significance of the retirement of the bonds cannot be played down, because it addresses legitimate and illegitimate concerns about AMCON.
“Also, AMCON should be commended for its professionalism in managing its balance sheet, reducing its indebtedness and also reducing the fear that AMCON is crowding out the federal government and other borrowers in the economy.
“It is also a clear sign that the federal government’s guarantee will not be called in.”