NIGERIA: Enterprise Bank is Up for Sale

By putting Enterprise Bank Limited first among the three bridged banks to be sold, the Asset Management Corporation of Nigeria (AMCON) may be testing the waters of privatisation with the doctrine of the smaller the size, the smaller the risk.

From all indications, the Asset Management Corporation of Nigeria (AMCON) is having a smooth sail in its bid to hand over the three bridged banks- Enterprise Bank Limited, Keystone Bank Limited and Mainstreet Bank Limited- to prospective buyers latest by the third quarter of next year.

Enterprise Bank was created from the defunct Spring Bank, while Keystone Bank Limited and Mainstreet Bank Limited emerged from the ashes of defunct Bank PHB and Afribank respectively in 2011 by the Central Bank of Nigeria (CBN) following the expiration of the deadline given to a number of sick banks to get buyers.

The corporation had acquired them in August 2011, after the intervention by the Nigeria Deposit Insurance Corporation (NDIC) and the CBN.
Although the three

banks have demonstrated their readiness to put their recent history behind them and compete favourably with their peers, AMCON insisted it must follow the timetable for the sale of the banks, which it drew in 2011 when the affected banks were bridged.
The process, 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 Bank First
It was therefore a relief for members of the banking public a fortnight ago when AMCON, the main shareholder for the three banks, announced the plan to start the process by offering Enterprise Bank for sale in June. 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.

AMCON’s Managing Director Mustafa Chike-Obi, who spoke with THISDAY on the sale of the banks, explained that Enterprise Bank was picked because it is the smallest of the three affected banks.

“Enterprise Bank is the smallest and the cleanest of the three banks and anything learnt from the process of its sale can be applied in subsequent efforts. There is nothing magical about it,” he said.
No Official Discussion with Potential Buyers Yet

THISDAY sought to know the number of investors seeking to buy the bank, but Chike-Obi said AMCON has not been discussing with any investors officially, given the fact that such negotiations could only start after the report of the financial advisers to the bank is submitted.

According to him, financial advisers to work on the sale of Enterprise Bank would be announced in two weeks’ time while the sale of the bank is to take place in less than 30 days.

He, however, admitted that despite the determination of AMCON to stick to its timetable, quite a number of people and organisations, at informal level, have expressed their interest in buying over the banks.

“It is true that we have been receiving calls from interested investors,” Chike-Obi who insisted the timetable for the sale of the banks must be strictly followed said.

Watchers of the unfolding development, however, pointed out that the decision of the AMCON to use Enterprise Bank as a launch pad in its drive to divest from the bridged banks must have informed why it is the only bank of the bridged banks to make public its financial reports as it revealed that its gross earnings increased significantly to N40.4billion as at December 2012, compared to the N10.5 billion achieved in the five-month period ended 2011.

A Profitable Bride
The bank also realised a profit before tax (PBT) of N11.3 billion as at December 31, 2012, as against a loss of N5.2billion recorded in the five-month period it operated as at December 2011. Enterprise Bank’s deposit also grew from N162. 6billion in 2011, to N208.4 billion in 2012, just as its total assets climbed from N198.5 billion as at end of 2011 to N261.1billion in the year under review.

Speaking during its recent annual general meeting, the Chairman of Enterprise Bank Limited, Mr. Emeka Onwuka, attributed the achievement of the bank to the sustained growth in quality risk asset creation, which equally engendered growth in interest income.
The chairman stated that in addition to “improvements in our other banking income items such as commissions, fees, electronic banking income, significant improvements in trade-related transactions, facilitated through our strategic focus on Small and Medium Enterprise (SME) helped in boosting our fees and commission income.”

Onwuka said by the performance, “a solid foundation has been built by the bank to ensure a sustainable growth in its business activities.”

Commenting on some of the structures that had been put in place by the management of the financial institution, he said: “Renovations were carried out on the corporate head office and branches of the bank, which will enhance the competitiveness of the bank in the industry

“Several brand management initiatives were implemented in the year, in a bid to create more awareness about the bank in the marketplace. The bank’s electronic banking platform has been further enhanced by capital investments in Automated Teller Machines (ATMs), Point of Sale (PoS) terminals and several variants of electronic cards.”

Mainstreet, Keystone in Good Standing
Meanwhile, a source disclosed that apart from Enterprise Bank, the other two bridged banks, Mainstreet Bank and Keystone Bank, have also lived up to expectation.

“I can tell you that these three banks have done their homework well. You will be pleasantly surprised by the time the results of the other two bridged banks are made public.

“What we are seeing is the result of adequate supervision of the affected banks by the CBN and AMCON. In the case of Mainstreet Bank, the management has been able to use the bank’s rich history, wide spread and rich culture not only to improve on its customers’ base but also to grow its profit.

“Keystone Bank is a dynamic institution and a lot of innovations have been put in place by the current management. It is therefore not a surprise that these institutions are being sought after by investors ahead of the time earmarked for their sale,” the source said.

Leave a Reply