Sgbn

[hispy99]

SGBN Resurrects
•To raise N34bn capital •Plans name change
By Ayodele Aminu, 08.27.2008

Add To Favorites
Print This Article
Post Comment

Three years after it went under, indications emerged yesterday that Societe Generale Bank of Nigeria (SGBN) will soon resurrect as the bank finalises plans to raise N34 billion.
Already, about N4 billion is said to have been mobilised, while the financial advisers to the bank are said to be putting finishing touches into how an additional capital of N34 billion will be raised.
Sources in the know of the deal told THISDAY yesterday that SGBN was also planning to come out with a new name, which is still said to be “jealously guarded” by its owners.
Besides, SGBN is also said to be shopping to fill its top management positions from the existing banks with a view to boosting its staff strength.
Contacted yesterday, the Managing Director of SGBN, Mr. Robert Mbonu, neither denied nor confirmed the developments, pleading that he be given more time to respond.
“I am not in a position to give you any information now but by Thursday I’ll be able to give you more information than what you have now,” Mbonu told THISDAY.
SGBN, in which Second Republic Senate Leader, Dr. Olusola Saraki, had a controlling stake, was sent out of the clearing house in 2003 following its inability to meet its financial obligations.
During this period, SGBN was also unable to fund its CBN Account, which was overdrawn by several billions of naira.
The embattled bank, which was then asked to recapitalise to the tune of N4 billion by the apex bank (the stipulated capital base of banks then was N2 billion) was said to have already raised N2.5 billion. The move was geared towards diluting the ownership structure of the bank.
The Chairman, Saraki, was said to have accepted to sell a substantial part of his holdings in the bank to professionals so that the bank could get back to profitability.
One of the two investors that showed interest was expected to acquire 51 per cent of SGBN, which was said to be worth over N2 billion. But eventually the deal could not sail thorough. Eventually, the bank was liquidated in 2005 on the order of the CBN.
SGBN then began the legal proceedings, insisting that the revocation of its banking licence was in bad taste, alleging that the banking watchdog did also not give the institution enough time to recapitalise.
The development culminated in the ruling of a Federal High Court sitting in Abuja last April to the effect that CBN had not given the promoters of SGBN enough time to recapitalise.
A few days after the court ruling and after apparently deciding to file an appeal, the apex bank said it would not appeal against the judgment of the lower court. It said its decision not to appeal the judgment was informed by its desire not to further compound the suffering of depositors of SGBN whose monies were trapped in the bank.
The court had given the SGBN 30 days to recapitalise or be acquired by another bank within the same period.
Part of the conditions the promoters of SGBN would meet within the stipulated period is the offsetting of about N1.6 billion debt to the apex bank.
The amount represents the 80 per cent forbearance CBN granted to banks during the recapitalisation exercise. Before SGBN could be entitled to the forbearance from the apex bank, it must meet two critical conditions.
The conditions include the disclosure of all loans and their beneficiaries, the names of directors and other insider-related credits as well as recovery of the loans within the stipulated 30 days period.
Recently, after the botched merger talks with Unity Bank, SGBN initiated discussions with Intercontinental Bank Plc. Due diligence was said to have been conducted, while SGBN, in a bid to tidy up the deal, requested additional 15 days, which was granted by the apex bank.
But the deal was said to have hit the rocks as the duo could not reach a consensus on certain issues relating to pricing.