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FRC to probe sale of Mainstreet, Enterprise Banks

By BusinessNews Staff on December 16, 2014

The Financial Reporting Council (FRC) has indicated plans to investigate the sale of the bridged banks by the Asset Management Corporation of Nigeria (AMCON) next year.

The Chief Executive Officer of the FRC, Mr. Jim Obazee, gave the indication while speaking at a retreat organised for journalists by the council in Lagos at the weekend.

The affected banks are Mainstreet Bank Limited, Enterprise Bank Limited and Keystone Bank Limited.

Until last month, the three banks were wholly owned by AMCON. However, the corporation recently sold Enterprise Bank to Heritage Bank Limited and Mainstreet Bank to Skye Bank, through a bid process.

But according to AMCON, Keystone Bank would be sold next year.

But Obazee said: “We want to examine the books of the banks involved in the recent acquisition of bridged banks. We want to know whether it is the case of a weaker bank buying a stronger bank, we want to determine whether it is a reversed acquisition and see how they accounted for it in their books.

“They have to report it correctly in their books as a reversed acquisition if it is one. Otherwise, we will withdraw the financial statement and ask them to go and report it correctly. There is a whole lot of action we can take on them.”

Also, Obazee said the federal government and 36 states would be required to publish their financial statements, in line with the provisions of the FRC Act from next year.

“The FRC will from 2015 require the federal government and state governments to publish their financial statements. It is about governance and stewardship. They need to show to the public the amount that entered their accounts and how it was spent,” he explained.

According to the FRC boss, given current international trend as well as the critical role of auditors, embracing some degree of changes being considered internationally might be required in Nigeria.

He identified some corporate governance challenges in the country to include insider dominated Boards (private and public sectors), non-independent or affiliated corporate boards, absence of minority voice on boards of companies, minorities helplessly widely dispersed, inadequate minority shareholder protection (MSP), and significant resistance to the concept of independent non-executives.

Others include inadequate board monitoring and supervision of the executive, compromisable external audit function and ineffective audit committees, easily repressible internal audit function, easily repressible chief governance compliance officers, among others.

Furthermore, he listed some challenges facing regulators in Nigeria to include “under-capitalisation of many industries, tycoon syndrome, presence of dinosaur companies and ability of regulators to enforce the law.”

He said: “2015 is the score card on the adoption of IFRS in Nigeria. The FRC shall commence audit quality inspections. It should be noted that the FRC is currently seeking membership of the International Forum of Independent Audit Regulators (IFIAR).

“This will be a booster to the capacity of the Council to monitor audit quality. The National Code of Corporate governance will be operational in the first quarters of 2015.

“This will also strengthen the compliance with Section 44 (3) of the FRC Act and enhance the inflow of Foreign Direct Investment and steer greater interest from local investors.”

[ThisDay]

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