Nigeria - Central Bank (CBN) is considering three options to recapitalise the country’s five troubled banks

The banks are: Intercontinetal Bank; Oceanic Bank; Union Bank; Finbank and Afribank.
The Central Bank is considering three local options aimed at acquisitions of the five troubled banks following the seeming collapse of its offshore investment mission.

The three options which the apex bank is considering are:

Option 1: Rights Issue

In which the apex bank hopes to execute a rights issue, converting the tier two capital (the amount injected) to 80 per cent stake in the affected banks’ shareholding, leaving the other shareholders with 20 per cent.

Option 2: Scheme of Arrangement

The CBN management is said to be considering the alternative of getting the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange NSE, to do a “Scheme of Arrangement”. The thinking in the CBN is that this option is the most viable now and if applied, it will involve a legal means of bringing shareholders of these banks to an extra-ordinary General Meeting to agree to a merger or acquisition arrangement.

Option 3: Acquisition

If the first two options fail, the apex bank would then go for the third option which is acquisition.

This involves nominating a bank in the country to acquire any of the five banks and then backing the action with statutory powers.