The signing of Share Purchase Agreement (SPA) between Bureau of Public Enterprises (BPE) and UC Rusal, which recognised the latter as the core investor in aluminum smelter firm, ALSCON, has ended a decade of deadlocked litigation that crippled the Akwa Ibom-based firm. ABDULWAHAB ISA reports
Save for the recent amicable resolution, Akwa-Ibom-based Aluminium Smelter Company of Nigeria (ALSCON) located in Ikot Abasi was a thorn in the flesh of Bureau of Public Enterprises (BPE).
Its nightmares were shared by other stakeholders, the host community and feuding core investors locked in legal battle with the Federal Government over ownership dispute. To them, ALSCON was a burden that must be expeditiously resolved.
ALSCON was incorporated in 1989 with the Federal Government of Nigeria, Ferrostaal of Germany and Reynolds Incorporated of America as shareholders on an equity holding of 70 per cent, 20 per cent and 10 per cent respectively.
The company was established with clear cut objectives to utilise and enhance the country’s gas reserve and discourage gas flaring in the Niger Delta.
Its broad terms include establishing a self-reliant aluminium factory, provide employment to Nigerians and impact technical and develop trained technical manpower, to conserve and earn foreign exchange by meeting local aluminium demands, and aid the development of aluminium downstream industries.
Hitherto, the firm was under the purview of Ministry of Industries until 1991 when it was handed over to the then Ministry of Mines, Power and Steel to manage.
The plant, designed to produce 197,000 metric tonnes of aluminium ingots and billets per annum, commenced production on October 15, 1997.
ALSCON enjoyed uninterrupted production, hitting production target before a snap on June 6, 1999. The major factors that accounted for production pack up included irreconcilable differences between Ferrostaal and Reynolds, lack of working capital, insufficient gas supply and non-dredging of Imo River among others.
To break the jinx and restart production, ALSCON was listed in the 2nd phase of the privatisation programme in the Privatisation and Commercialisation Act of 1999.
In September 2002, the Bureau of Public Enterprises (BPE) commenced the privatization process and requested for core investors to express interest in acquiring the Federal Government’s shares. Five companies expressed interest in acquiring the firm. They were ALCOA Inc. of America; Glencore AG of Switzerland; UC Rusal of Russia; ALCAN of Canada and Ferrostaal AG of Germany
After the due diligence, only UC Rusal and Ferrostaal submitted technical and financial bids. Ferrostaal was, however, disqualified by BPE for submitting conditional bids.
This left UC Rusal as the only qualified bidder and the process was therefore aborted.
The process was restarted in 2004. BPE invited interested companies to bid for ALSCON majority stake of which only BFI Group and UC RUSAL satisfied the initial pre-qualification requirements.
BFI Group emerged the preferred bidder with a bid price offer of $410 million, while UC Rusal was disqualified for submitting a conditional bid.
However, BFI Group failed to meet the deadline of July 8, 2004 for the payment of 10 per cent of the bid and was therefore disqualified. Consequently, BPE reopened negotiations with UC Rusal on the basis of a negotiated sale strategy (otherwise known as willing-buyer-willing-seller).
UC Rusal won the FGN equity as core investor and the transaction was approved by the National Council on Privatisation. BPE subsequently handed over ALSCON to UC Rusal at a bid price of $250 million with $120 million out of the total sum set aside for the dredging of Imo River.
In September 2004, the core investor-BFI Group, dragged BPE before an Abuja High Court for overturning its victory and handing over ALSCON to UC Rusal.
The Federal High Court decided the case in favour of BPE, but BFIG appealed and also lost at the appeal court. BFI Group then took the case to the Supreme Court.
However, in between the period, UC RUSAL commenced production in 2008, but insufficient gas supply to the smelter as well as staff agitation due to non-payment of the balance of their terminal benefit amounting to N2.3 billion constituted a major challenge among others to the smooth operation of the plant.
On July 6, 2012, the Supreme Court revoked the sale of ALSCON to UC Rusal and reinstated BFI Group as preferred bidder for ALSCON.
The Supreme Court ordered inter alia (1) “An order of specific performance is hereby decreed directing the Defendant/Respondent (BPE) to provide the mutually agreed Share Purchase Agreement for execution by the parties to enable the Plaintiff/Appellant (BFIG Group) pay 10% of the accepted bid price of US$410 Million (i.e. the sum of US$41Million) within 15 working days from the date of execution of SPA in accordance with the agreement dated 20/5/2004 and 90% bid price shall be paid within 90 calendar days.”
ii) “An order for the Defendant/Respondent to accept payment of the 10 per cent of the bid price from the appellant within 15 days from the date of signing the Share Purchase Agreement (SPA).”
iii) An order of Perpetual Injunction restraining the Defendant/Respondent (BPE), its servants, agent, privies, management or howsoever called from inviting any further bidding for the sale and acquisition of ALSCON in violation of the contract between the Plaintiff/Appellant and the Defendant/Respondent and/or from negotiating to sell, selling, transferring or otherwise handing over ALSCON to any person or persons in violation of the contract between the Plaintiff/Appellant and the Defendant.”
The transaction for the core investor sale of ALSCON to BFIG was terminated after the expiration of the deadline of March 18, 2013 given to them to sign the SPA and pay 10 per cent of the bid price as ordered by the Supreme Court. BPE reinstated UC RUSAL again as the core investor in ALSCON.
Meanwhile, BFI Group has again gone back to court to compel BPE to reinstate them in ALSCON and the court has ruled in their favour, but BPE has filed an appeal and the case is yet to be determined.
As a result of the uncertainty created by the Judgment and the delay to resolve the case, UC Rusal and ALSCON has been suffering grave damages, as most developmental projects at the smelter have been put on hold. ALSCON/RUSAL is incurring enormous losses having to maintain the plant and staff without being in operation. Consequently, the company retrenched most of the workforce in order to minimise losses.
Finding a solution
To navigate the firm from the shores of protracted crisis, Minister of Mines and Steel Development, Dr. Kayode Fayemi, and the BPE worked assiduously to bring the firm back to its feet. BPE sent a memo to the Vice President, Prof Yemi Osinbajo, to invite the parties with a view to reconciling them. Several mediatory meetings were held, some at the ministerial level to explore both administrative and political approaches to resolving this impasse to enable ALSCON realise and optimise its potential to the benefit of the nation.
At the meeting of the NCP held in August 2017, the council approved an out of court settlement to resolve the lingering dispute between the FGN, BFIG AND UC Rusal through mediation with the active collaboration of Ministry of Mines and Steel Development.
Subsequently, BPE provided the SPA to BFIG for execution in compliance with the order of the Supreme Court and asked BFIG to provide a business plan as required in the SPA and to execute the SPA within a period of seven days as contained in the judgment of the Supreme Court.
Again, BFIG failed to execute the SPA as ordered by the Supreme Court and could not meet the terms of the transaction by close of business on Tuesday, October 3, 2017 (making it the 3rd time the company has failed to meet terms of this transaction), indicating lack of good faith to resolve the impasse.
The renewed Share Purchase Agreement was signed during a brief ceremony at the Ministry of Mines and Steel Development, Abuja, witnessed by Fayemi; Minister of State, Hon Abubakar Bawa Bwari; Director General, Bureau of Public Enterprise (BPE), Alex Okoh; Russian Ambassador to Nigeria, Nickolai Udovichenko; CEO/Member of the Board of Directors UC Rusal, Vladislav Soloviev; Managing Director ALSCON, Dmitry Zavyaiov; and Head of Legal, UC Rusal, Piter Maxsimov.
Speaking at the event, Fayemi said President Mohammadu Buhari was keen on seeing to the conclusion of the agreement as soon as possible so that the company could get back on its feet and Nigeria and Russia can strengthen the historical partnership between the two countries.
The Drector General, BPE, Alex Okoh, in his remarks, commended the efforts of Fayemi and his commitment in ensuring the success of the negotiation.
The BPE boss said he was optimistic that the remaining issues would be resolved both on the legal side as well the technical and production issues, adding that government still retained 20 per cent equity in the firm.
Ambassador Nickolai Udovichenko, who led the Russian Government delegation to the event, thanked the Nigerian Government for resolving the impasse, while also lauding the efforts of the minister. He described the development as a new beginning for the two countries.
On his part, The traditional ruler of Ikot Abasi, His Royal Majesty, Edidem U.J Ntuk Obom XII, urged the Federal Government to do everything possible to ensure that ALSCON is revitalised so that economic prosperity of the town could return.
The monarch said ALSCON was the life wire of the community, stressing that the company gave the community 24-hour power supply, employments and awarded scholarships to its students.
ALSCON’s journey has been a tortuous one, no doubt. However, it is reassuring to know it ended on a pleasant note with the hurdles, hitherto, stalling production uprooted, a new dawn sets in for ALSCON .
Interest rates cut likely at MPC’s meeting in 2018 –Aigboje
Managing Director, Capital Bancorp Plc, Mr. Higo Aigboje in this interview with Chris Ugwu, speaks on the financial services sector and the economy and concludes that there is a possibility of rates cut in 2018. Excerpts:
What is your take on the financial market?
The Nigerian financial market performance in 2017 was more stable than the previous year using some economic and market indicators as yardsticks.
Unlike the previous year where only the money and bond markets were active as a result relatively high interest rates occasioned in part by the ever increasing inflation rate and federal government’s appetite for borrowing, the stock market had its fair share in the upbeat with the stock market index closed northward and ranked as the third best performing stock market of 2017 globally.
The Foreign Exchange market experienced some level of stability owning to CBN’s actions on introduction of Investors’ and Exporters’ Window and CBN’s direct intervention occasioned by the accretion to the foreign reserves from oil revenues.
The banking industry also saw some level of better performance as some of the banks were able to latch on the opportunities in Nigerian Treasury bills in the year. The banks also saw an improved provisioning as a result of the improved performance of some of their debtors in the year.
Do you expect the gradual recovery in the economy to gain momentum this year?
In what we describe as a fair outing for the Nigerian economy in 2017 having come from a difficult year in 2016, I think the country looks poised to record better performance in 2018. In the early part of the year, the International Monetary Fund (IMF) projected a growth rate of 0.8 per cent while the World Bank projected a growth rate of 1.00 per cent for 2017.
Recent forecast by both bodies have maintained their initial growth forecast for the country. However, we are more bullish as we maintain our growth estimate of 1.5 per cent for 2017. Growth in 2018 was projected to significantly improve on the back of firming oil prices, improved foreign exchange liquidity, rising government revenues and increase in the government spending.
Going from the third quarter 2017, GDP report released by the Nigerian Bureau of Statistics (NBS), the non-oil sector of the Nigerian economy needs to report signs of a recovery for growth to reach levels seen before the oil price decline as consistent negative growth in the non-oil sector will continue to remain a drag on the overall growth potential of the Nigerian economy.
I also hope that appropriate policies, both monetary and fiscal will be put in place in 2018 to drive economic growth. I think also that the Federal Government will rapidly pass the 2018 Budget into law and execute the projects in desirable time to boost economic activities. 1 am of opinion that if the government rides on the current events, which presently are in the favour of Nigeria, the country will grow by an average of 2.2 per cent in 2018, despite downside risk to this growth forecast.
So, what are the downside risks to Nigeria’s GDP growth?
The projected GDP growth rate for 2018 should become a reality if the government continues to boost its non-oil sector revenues and properly deal with issues relating to wasteful government spending and non-friendly business policies.
Some of the downward risks to GDP growth also include a sudden decline in oil prices due to increased production from exporting countries; a sudden rise in insecurity and insurgency, which may disrupt economic activities in Nigeria; improper management and use of its foreign reserves, which would lead to further depletion and cause FX volatility and lack of clear and proper fiscal policies to drive different sectors of the economy.
The trending patriotic policies by advanced countries may also hamper inflow of both Foreign Direct Investments (FDIs) and Foreign Portfolio Investments (FPIs) even as some advanced countries have reported a rise in interest rates.
Looking at how some banks fared in 2017, do you think they will continue to return profits in 2018?
The Nigerian banking sector has remained one of the most vibrant and delicate sectors in the Nigerian economy especially as it has the capacity to send shock waves round the economy if it fails.
The sector has since 2015 continued to suffer significant headwinds as the CBN monetary policies and economic realities have continued to hamper its ability to significantly grow profits. However, most of the Tier-1 banks have been able to surmount these headwinds and have continued to surpass expectations even in the face of the unfriendly business environment and hostile business policies.
2017 saw the banking sector continue to post bumper earnings especially for most of the Tier-1 banks and a few Tier-2 banks. The rest of the group have continued to battle with high level of loan impairment, which has eaten deep into their operating profit and dampened their ability to grow their bottom line.
Non-Performing loans as at June 2016 stood at 11.7 percent and rose to 12.8 as at December 2016 with a large portion of the rise attributed to the banks in the Tier-2 space. The CBN may need to increase its oversight of the credit and approval process of the tie-2 banks in a bid to limit the rising NPLs.
The banks in 2017 are also expected to report higher interest income on the back of the high interest rate environment observed during the period while we expect an increase in cost to income ratio for the period.
Going forward, the banking sector is expected to remain robust and continue to return profits into 2018 but with the implementation of IFRS 9, which require banks to recognise impairment sooner and estimate lifetime expected losses against a wider spectrum of assets, which is expected take effect from 2018, we expect a prompt increase in the banks impairment charge, which will reduce profitability going forward but make banks stronger and less exposed to risk of impairment shocks.
Also, despite the reduction in interest rates, which is expected to increase banks’ lending to the real sector of the economy, the implementation of IFRS 9 may hamper some of the banks as an aggressive rise in loan advances would give rise to increased provisioning, which may affect the bank’s capital buffers in the immediate. All in all, the banks are expected to have a decent outing during the year 2018 with less shocks expected in the sector.
Do you think there is need for rates cut following the decline in inflation?
Having maintained the Monetary Policy Rate (MPR) and Cash Reserve Requirement (CRR) at 14 per cent and 22.50 per cent respectively while also retaining the asymmetric corridor of +200 bps above and -500 bps around the MPR for over a year, we expect a rate cut at the first meeting of the Monetary Policy Committee of the CBN in 2018, and we are of the opinion that the committee will cut the benchmark interest rate by 0.5 per cent or 1.00 per cent thereby taking the Monetary Policy Rate (MPR) to 13.50 per cent or 13.00 per cent.
The projected cut in rate is imminent owing to CBN’s continuous slash in stop rates for treasury bills, which once stood at a high of about 18.815 per cent in May 2017 and closed the last auction date at 15.57 percent last November.
The continuous decline in inflation figures have also supported the banks target to reduce the interest burden on its debt obligation and also offer real return on its securities.
In a bid to reduce the country’s domestic debt obligation, CBN repaid all the maturing treasury bills that matured in December 2017 and have signalled that it would continue to drop its stop rate going forward into year 2018 even as the CBN targets inflation rate below 12 percent for 2018.
As CBN drops MPR rate, we expect the real sector of the economy to benefit as a few banks will be forced to lend to the real sector of the economy as government securities become less attractive given the low return being offered.
Businesses will also see their interest expense drop on the back of dropping interest rates and we anticipated the MPR to close the year at 12 per cent, 2 per cent down from 14 per cent benchmark rate as at December 2017.
What is your take on the stock market in 2017 and the prospects in the current year?
The Nigerian stock market had an impressive showing in 2017 having closed the year with return of 42.30 per cent making it the third best performing stock market behind Argentina, which returned 77 per cent and Turkey that returned 48 per cent, we have projected a 25 per cent return for the Nigeria Stock Market for 2018 though downside risk to achieving this target remain visible.
The market gains in 2017 were driven by impressive returns in the Banking sector, which returned 73.32 per cent, the consumer goods sector that returned 36.97 per cent and the industrial goods sector, which returned 23.84 per cent while other sectors of the market recorded gains except for the Alternative securities market (ASEM), which closed down by 8.60 per cent.
The trading aspect recorded significant recovery while the market witnessed increased issues compared to 2016 where there were no issues.
The year 2018 is expected to witness a similar trend observed in 2017 as economic indicators have improved and the world now projects increased investor confidence and GDP growth for Nigerian economy.
Going forward we expect to see more trading activities in the secondary market as listed companies will begin to trade at new highs never seen before even as their profitability soars on the back of a vibrant economy.
The primary market is also expected to be active in the year with expectation of new listings, mergers and acquisitions, Rights issue, listing by introduction etc. are all expected to drive overall market activity and deepen the market in the process.
What do you think will determine the success of the market this year?
The success of the Nigerian stock market will be hinged on many factors. Amongst them are the firming or stability of oil prices; constant monitoring and effective management of the foreign exchange market; improvement in corporate earnings for the period; significant focus on the non-oil sector to increase output; enhancing the country’s non-oil sector export proceeds to improve FX liquidity; a lower interest rate regime; effective implementation and communication of the government economic policies.
Others include government focus on the real sectors of the economy to stimulate the economy; improve market participation by local investors and Domestic institutional investors; continuous robust regulatory oversight of the listed companies by all the market regulators; passage of Petroleum Industry Bill, unbundling of Nigerian National Petroleum Corporation (NNPC) and listing of the resultant companies; listing of already privatised companies such as MTN, Gencos and Discos and effective use of monetary policies.
Having seen the nine months earnings result for most of the listed companies, investor will begin to take position in anticipation of the companies audited result, dividend declaration and Q1 2018 result, which we expect to boost stock prices in the immediate and also trigger further activities especially for companies, which report impressive performance for their Q1 2018 numbers.
Generally, despite the downside risk to the outlook of the equities market, we are optimistic about the performance of the equities market as we believe that most of the fundamentals are in favour of a further surge in the equities market.
In conclusion, despite the rally observed in the equity space in 2017, there remains a pool of untapped potential in the stock market as most of the listed companies still trade at prices below their book value while a few stocks still trade at prices below our recommended target price.
We believe the current prices still gives room for ample upside and significant return to investors despite the fact that the dividend yield of the company would have slightly inched lower on the back of rising prices but still remain attractive especially with the potential benefit of capital appreciation in the short to medium term. We however, advise that investment in the stock market be made mainly on fundamental analysis and not on the back of a band wagon effect, which could fizzle out at any moment and keep the investor trapped in a wrong stock.
Nigerian now AACSB secretary-treasurer
The world’s largest business education network, Association to Advance Collegiate Schools of Business (AACSB) International, has appointed the Dean of Lagos Business School (LBS), Dr. Enase Okonedo, as its secretary-treasurer.
She was elected to the board in 2015, and her new position became effective February 6th, 2018.
Okonedo, according to a statement from AACSB, is an accomplished professional with more than 30 years experience in the financial services and business education sector.
She has held several leadership positions at LBS, including that of the EMBA director, academic director, and deputy dean of academics.
In recognition of her leadership and contributions to the Nigerian education sector, she was awarded a fellow of the Society of Corporate Governance Nigeria (SCGN).
Also, she is a fellow of the Institute of Chartered Accountants of Nigeria (FCA) and a fellow of the International Academy of Management (IAM).
Besides, AACSB has recognised Mr. Paul Orajiaka an alumnus of the Lagos Business School over the positive impact the business school graduates were making in communities around the globe.
Orajiaka – the Advanced Management Programme 20 and the Executive MBA 14, was recognised at AACSB’s 2018 Deans Conference in Las Vegas, Nevada, USA.
He was among a group of 29 business pioneers from 13 industry sectors, whose careers are addressing today’s most pressing social, economic, environmental and educational challenges.
Orajiaka was nominated by the Lagos Business School and was honoured for his passion for social entrepreneurship.
Fortis MFB: Regulatory hammer cuts earnings
The technical suspension on Fortis’ shares for inability to submit financial statement as at when due impacted negatively on the earnings of the lender. Chris Ugwu writes
Microfinance Policy Regulatory and Supervisory Framework (MPRSF) were launched in 2005 and the objectives were to address the prolonged non-performance of many existing community banks.
This has been attributed to incompetent management, weak internal controls and high cost of transactions. Other objectives to be addressed by MPRSF are poor corporate governance, lack of well-defined operations, restrictive regulatory/supervisory requirements, and weak capital base of existing institutions.
Indeed, a huge gap exists in the provision of financial services to a large number of active but poor and low income groups, especially in the rural areas as a result of rigidity in operations of formal financial institutions in Nigeria.
However, despite the efforts, the problem of funding has remained a major militating factor against the effectiveness of micro finance banks in Nigeria.
This is because the Nigerian economy has continued to face major headwinds, from substantial decline in international crude oil prices to significant constraints to business activities in the north eastern part of the country owing to the activities of insurgents.
The fall in crude prices had heightened pressure on the Nigeria’s foreign reserves and the domestic currency, leading to the volatility in exchange rate and a dip in foreign reserves.
These microeconomic pressures and unrelenting regulatory adjustments have to a large extent constrained the margins of financial institutions in the country.
Fortis Microfinance Bank Plc, which had sustained considerable growth in bottom line, has also been affected by not only harsh operating milieu but investors’ negative perception following the suspension NSE placed on its shares for default in filing 2016 financial results as and when due.
The MFB, which began to show positive outlook earnings during the second quarter of 2016, dropped sharply in the third quarter of third quarter of 2017.
The share price, which closed at N2.58 per share in March 31, 2017 has remained at the same price even as at Friday due to the technical suspension placed on the shares of the company.
Fortis Microfinance Plc began the first quarter ended March 31 2016 with 55.31 per cent drop in profit after tax to N71.910 million from N160.933 million recorded a year earlier.
Its pre-tax profit equally dropped by 55.31per cent from N102.728 million the previous year to N229.904 million during the period under review.
Fortis’s interest income grew by 17.89 per cent from N566.429 million in 2015 to N667.774 million during the financial year 2016.
However, the lender’s second quarter ended June 30, 2016 profit after tax grew by 14.42 per cent to N267.996 million from N234.225 million recorded a year earlier.
The institution’s pre-tax profit equally grew by 14.42 per cent from N334.608 million the previous year to N382.851 million during the period under review.
Fortis’s interest income grew by 37.73 per cent from N1.304 billion in 2015 to N1.796 billion during the financial year 2016.
Also, the lender’s third quarter ended September 30, 2016 profit after tax grew by 15.27 per cent to N421.729 million from N365.845 million recorded a year earlier.
In a filing from the Nigerian Stock Exchange (NSE), the microfinance institution’s pre-tax profit equally grew by 15.27 per cent from N522.636 million the previous year to N602.471 million during the period under review.
Its interest income rose by 44.38 per cent from N1.836 billion in 2015 to N2.651 billion during the financial year 2016.
Fortis’ full year ended December 31, 2016 profit after tax inched up marginally by 0.44 per cent to N586.255 million from N583.703 million recorded a year earlier.
The microfinance institution’s pre-tax profit however, dropped by 5.65 per cent from N882.521 million the previous year to N832.605 million during the period under review.
Its interest income increased by 19.26 per cent from N3.649 billion in 2015 to N4.352 billion during the financial year 2016.
Fortis Microfinance sustained positive bottom line in the half year ended June 30, 2017 with profit after tax growing by 152.82 per cent to N677.549 million from N267.996 million recorded a year earlier.
A report obtained from the NSE, showed that the microfinance institution’s pre-tax profit equally rose by 152.82 per cent from N382.851 million the previous year to N967.927 million during the period under review.
Fortis’s interest income rose by 40.53 per cent from N1.796 billion in 2016 to N2.324 billion during the financial year 2017.
However, the MFB’s third quarter ended September 30, 2017 profit after tax dropped by 82.52 per cent to N73.713 million from N421.729 million recorded a year earlier as challenges of operational environment tool toll on the company.
Its pre-tax profit equally fell by 82.52 per cent from N602.471 million the previous year to N105.305 million during the period under review.
Fortis’s interest income grew marginally by 3.36 per cent from N2.651 billion in 2016 to N2.740 billion during the financial year 2017.
Default in filing results
Consequent upon the inability of Fortis to submit its year end 31 December 2016 audited financial statements to the NSE when due, as required by the applicable provisions, the shares of the Bank were suspended from being traded on the floor of The Exchange.
According to the management, the non-rendition of statements to the Exchange within the material period was chiefly attributable to the fact that, as a banking institution, the statements of Fortis had to be submitted to the apex bank prior to being released for any purpose.
“The technical suspension of Fortis’ shares from the trading floor of the Exchange set off a chain reaction that culminated in several unintended outcomes, the most significant being the panic withdrawals of deposits it triggered. This was because the announcement was largely misconceived, misinterpreted and misunderstood as a revocation of the Bank’s operating license.
“Although the Exchange lifted the suspension on 15th September 2017, after the Bank submitted the financial statements and met other conditions for the lifting as required by the Exchange, it was impossible to change the mindset of majority of depositors within such a very short time, “the management noted.
It noted that the Bank is addressing these challenges, adding that in the third quarter of 2017, just as Fortis was on the cusp of migrating to a more versatile and robust Core Banking Application, several accounting anomalies were unearthed that had to be immediately brought to the attention of the Bank’s primary Regulator, the Central Bank of Nigeria.
“Due to the observed accounting irregularities, previous financials filed with regulatory authorities and released to the public may have been impacted and may have to be restated where necessary. With the approval and guidance of the CBN, Fortis is currently engaged in a far-reaching house cleaning exercise, which at the end will culminate in the emergence of a leaner, healthier bank set apart by a renewed emphasis on professionalism and adherence to international best ethical standards,” the Bank said.
In furtherance of the process of enshrining good corporate governance, the lender said it recently identified three qualified individuals with considerable experience to join the Board as independent directors who have no previous existing relationship with Fortis in any way, shape or form.
These individuals according to the bank, would be presented to the shareholders for their approval at the next Annual General Meeting (AGM) of the Bank, which is expected to hold during the first quarter of 2018.
“If approved, the addition of these individuals to the Board will enhance the Board’s capacity to perform its oversight functions and enhance the workings of various critical board committees.
Furthermore, negotiations are on-going with the bank’s group of foreign lenders to grant it the much needed respite through the restructuring of existing facilities,” it said.
The bank added that discussions are also at an advanced stage to engage a reputable firm of turnaround experts working in concert with a revitalized management team to quickly restore the FMFB on the path of sustainability and profitability, through the adoption of a revised business model and rejigging of the existing Five-Year Strategic Plan.
For micro finance sector to experience positive times, the industry should embrace changes in business environment, which presents uncommon opportunities to deepen penetration of the market through creativity and ingenuity.
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