We Intervened in Etisalat, Banks’ Saga to Save Jobs, Asset Stripping, Says CBN

By Obinna  Chima
 

The Central Bank of Nigeria (CBN) yesterday revealed that it aligned with the position of the Nigeria Communications Commission (NCC) on the crisis between Etisalat and a consortium of 13 Nigerian Banks over a syndicated loan of about US$1.2 billion granted the company by the banks, In order to prevent job losses and asset stripping.

Confirming the intervention of the two regulators in the loan dispute, the CBN Spokesman, Isaac Okorafor said although it should ordinarily not be the role of a regulator to decide how individual bad loans were resolved, the CBN believed that Etisalat was a systemically important telecommunications company with over 20 million subscribers that if not well handled, may have domino effects on the banking system itself.

He further explained that the CBN and NCC, sensing that banks may go ahead in the usual way and downsize the company’s over 4,000 staff, reached an agreement to intervene and implore the consortium of banks to re-assess its position in dealing with Etisalat.

Okorafor, in a statement, explained that the collaborative move by the regulators was aimed at foreclosing the outcome of job loss and asset stripping and to ensure that Etisalat remained in business and able to pay back the loans.

According to him, the CBN and the NCC, in the coming days, would meet with the syndicate of banks and the IHS, the tower managers and the equipment suppliers, in order to achieve what he termed “a win-win outcome” for all stakeholders.

Just like the NCC, THISDAY exclusively reported Thursday that the leadership of the Central Bank of Nigeria  would resist the move by a consortium of banks to takeover Etisalat’s operating licence without its approval. 

A reliable central bank source who spoke with THISDAY, had said the Board of the CBN would not support any hostile takeover of the telecom company, due to its indebtedness to the banks. According to the source, the attempt by the banks to takeover Etisalat clearly jeorpardised the federal government’s effort to attract foreign direct investments (FDI) into Nigeria’s ailing economy.

A consortium of 13 Nigerian lenders led by Access Bank Plc had moved to make good an earlier threat to take over Etisalat following its inability to meet the payment terms on a $1.2 billion loan that it took in 2013 for network upgrade and expansion.

The banks, comprising Access Bank, Zenith Bank Plc, Guaranty Trust Bank Plc, First Bank Limited, Fidelity Bank Plc, First City Monument Bank (FCMB), Stanbic IBTC, EcoBank, United Bank for Africa (UBA) Plc and Union Bank of Nigeria Plc, among others, said they would take over Etisalat’s operations through its legal representative, United Capital Trustees.

Emirates Telecommunications Group Company (Etisalat Group), Abu Dhabi, which holds a 45 per cent stake in the Nigerian subsidiary had also announced Tuesday at the Abu Dhabi Stock Exchange that attempts to stave off the company’s takeover had proved abortive and that the lender banks were closing in.

Meanwhile, ahead of public holiday declared by the federal government to commemorate the Eid-el-Fitr, the CBN yesterday allocated the total sum of $240 million to the Retail Secondary Market Intervention Sales (SMIS) for spot and forward deals.

The Bank, also on Friday, confirmed the sale of forex to dealers in the Bureau de Change (BDC) segment of the market to meet the needs of low-end forex users.

According to Okorafor, the $240m figure released to the Retail SMIS included deals initiated in the course of the out-going week.

While expressing delight at the stability in the forex market, Okorafor said the Bank remained very optimistic that its goal of exchange rate convergence was fast becoming a reality, adding that the CBN was committed to ensuring liquidity in the forex market.

The CBN had in its interventions last week, injected about $831.5 million in the interbank forex market and released figures indicating that the Bank had boosted transactions at the Investors’ & Exporters’ (I&E) segment of the market to the tune of $2.2 billion

The naira continued to maintain its stability in the forex market, closing at an average of N365/$1 in the BDC segment of the market yesterday.