A US court has issued orders to call upon the representatives of a group that was founded to manage the rescued banks of Nigeria regarding a dispute with US investment firm Intangis Holdings.
The US firm claims that Nigeria has disregarded its privilege to purchase one of the rescued banks.
Nationalised in 2010 after near bankruptcy, Afribank was rechristened Mainstreet Bank over which Intangis claims rights in its plea.
Intangis declared that it had signed a deal to become a major stakeholder in Afribank prior to its collapse. Though the assets were shifted to Mainstreet Bank, Intangis expected it to honour the deal.
Asset Management Corporation of Nigeria (AMCON), created in 2010 to deal with the ‘bad banks’ of Nigeria, has until now handled Mainstreet Bank along with two more. It stated that the case did not raise cause for worry as Intangis’ deal was with the obsolete Afribank, which was no concern of Mainstreet.
In a talk with Reuters, AMCON chief executive Mustapha Chike-Obi said about Intangis: "I know about them… They have a deal with Afribank not Mainstreet Bank. It has nothing to do with Mainstreet Bank. I am not worried about them."
AMCON wants to sell Mainstreet by September 15 this year, a plan which Intangis is intent on foiling.
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By GlobalDataAMCON has requested Afrinvest, a local investment bank, alongside Barclays Bank to oversee the sale as it tries to divest itself of 100% shareholding.
Filed in the state of New York, AMCON has 20 days time after the summons to appear in court, failing which judgement would be passed against them. This follows the preliminary decision of September 2013 issued in favour of Intangis Holdings in the International Court of Arbitration in Paris.
AMCON may find the selling of Mainstreet Bank problematic if Intangis’ case is upheld by the court.
Following the 2008-09 financial crisis in Nigeria, the former central bank governor Lamido Sanusi helped avert a banking system collapse when he oversaw the $4 billion bail-out of ‘bad banks’. Sanusi, daringly disregarding powerful interests, fired eight chief executives, one of which included Afribank’s.
Prior to the nationalisation, in an attempt to scupper any deals, many of the banks’ shareholders went to court against Sanusi saying that he didn’t check with them before infusing funds into the banks and getting rid of their management. Most of the cases are still collecting dust in various Nigerian courts.
A few creditors and shareholders complained that their investments had been snatched away from them by authorities during the nationalisation. Ever since Sanusi got suspended after a row with President Goodluck Jonathan, they have strived to win back some amount of their investments. Sanusi finally got substituted in June.
