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AMCON Waives Right to Appoint Directors in Nationalised Banks

By on October 3, 2011

The Asset Management Corporation of Nigeria (AMCON) has waived its right to appoint directors into the boards of several banks it has significant equity stakes.

AMCON has significant equity stakes in post-combination First City Monument Bank Plc, Union Bank of Nigeria Plc, Ecobank Nigeria Plc, Sterling Bank Plc and Access Bank Plc through the corporations investments in three acquired banks- Equitorial Trust Bank (ETB), Oceanic Bank International, FinBank and Intercontinental Bank and through direct investment in Union Bank.

A top industry source said  AMCON has indicated that it would not exercise its right to appoint a director into the board of a bank where its 10 per cent equity stake automatically grants it a seat on the board of the post-merger entity.

Although the specific waiver was said to be due to AMCON’s trust in the corporate governance of the bank, the source said AMCON might adopt the waiver as a general policy in relation to all the banks where it has significant investments.

Under the mergers and acquisition deals struck by banks last week, AMCON is expected to receive equities for injection of capital to recapitalise rescued banks and reverse their huge negative shareholders’ funds to zero level as a first step to enhance the attraction of the banks. Thereafter, new investors are expected to recapitalise the banks to meet the minimum capital adequacy ratio of 15 per cent.

With overwhelming shareholders’approvals for the mergers and acquisitions, AMCON has 20 per cent equity stakes in Union Bank, 10 per cent equity stake in Sterling Bank through ETB and 15 per cent equity stake in Intercontinental Bank, which would be transferred to Access Bank. AMCON is expected to hold 4.28 billion shares in restructured capital of FinBank, which would be exchanged with FCMB shares in the ratio of one FCMB share for every six shares.

Besides, AMCON has substantial investments in nearly all Nigerian-owned banks, although there are no available data to ascertain whether this meets the statutory significance level of five per cent. Quoted companies are required to list out direct and indirect shareholdings of directors as well as other shareholders with equity stakes of five per cent and above.

Also, AMCON has sprinkles of shareholdings in several non-bank quoted companies, which shares were the underlying collaterals in several of the bad debts acquired by AMCON.

Managing director, AMCON,  Mr  Mustafa Chike-Obi, also confirmed  the corporation’s waiver of right to appoint directors.

He, however, reaffirmed the commitment of AMCON to protecting its investments in the banks and ensuring good corporate governance.

According to him, appointing director to the board is just one of the many ways shareholders can influence the corporate governance in their companies and AMCON will always be alive to its responsibilities to safeguard tax payers funds invested in the banks.

He said AMCON would not be involved in the running of the banks, but it would do everything to protect its funds by making sure that governance and investment in the banks are solid.

“We will explore all available means to protect our interests in the ownership of these banks, including appointing directors where necessary,” Chike-Obi said.

Nation