The Public Investment Corp., the biggest shareholder in Ecobank Transnational Inc., urged the lender to resolve a dispute over its chairman that threatens to tarnish the reputation of Africa’s most geographically diverse bank.
The Central Bank of Nigeria informed Ecobank in April that Kolapo Lawson failed to honor a pledge to repay debt owed to the Asset Management Corp. of Nigeria and that he was unfit to be head of the holding company, of which the bank is a subsidiary, the London-based Financial Times newspaper reported today, citing documents it has seen. Ecobank owes Amcon 1.2 billion naira ($7.4 million) and Agbara Estates, of which Lawson is the chairman, owes it 1.6 billion naira, the FT said, citing people familiar with the matter.
“We have written a letter to the board of directors, a confidential letter, requesting the board to quickly find time and space to discuss this matter so we can resolve it properly,” Daniel Matjila, the chief investment officer of the Pretoria-based PIC, said by phone today. The PIC didn’t ask that Lawson be replaced, he said.
The PIC, which manages more than 1 trillion rand ($101 billion) mostly on behalf of South African government workers, bought 20 percent of Lome, Togo-based Ecobank in April last year as part of a drive to invest in Africa outside its home market. Founded in 1985, Ecobank has expanded operations to 33 African countries and France, with representative offices in Beijing, Dubai, Johannesburg, London and Luanda, Angola.
Its assets totaled $19.6 billion at the end of March.
“It’s more of a reputational issue and if the Central Bank of Nigeria isn’t comfortable with your board chairman then it leaves little choice for them,” Ronak Gadhia, an Africa equity analyst at investment bank Exotix Ltd., said by phone today from London. The amount the bank owes shouldn’t “have a big impact, the bigger issue is the wider corporate governance,” he said.
Ecobank CEO Thierry Tanoh didn’t immediately respond to an e-mailed request seeking comment. Austin Osokpo, a spokesman of Ecobank Nigeria, referred questions to the head office in Togo. Nabi Souleymane Ouedraogo, the company’s spokesman, isn’t available, said a person who answered a call to Ecobank’s headquarters in Lome. Ugochukwu Okoroafor, a spokesman for the central bank in the Nigerian capital Abuja, said he couldn’t immediately comment when contacted by phone today.
Nigeria’s central bank had been supplied with extra information and the allegations have been laid to rest, Lawson told the FT. Ecobank’s board was kept fully informed and Lawson had reached an arrangement with the central bank which is waiting for approval, Tanoh told the newspaper.
Kayode Lambo, a spokesman for Amcon, didn’t answer two calls to his mobile phone seeking comment.
Nedbank Group Ltd., a South African bank controlled by London-based Old Mutual Plc, has an option to buy 20 percent of Ecobank in November. Nedbank Chief Executive Officer Mike Brown declined to comment in an e-mailed response to questions.
“I don’t think they’ll pull back just on the basis of this, I’m sure before committing further they’ll probably do more due diligence,” said Gadhia. Nedbank has “got the wider push into Africa strategy and this is sort of the perfect fit for them,” he said.
Ecobank’s shares listed in Nigeria fell 0.1 percent to 15 naira at the 2:30 p.m. close in Lagos, the commercial capital. Ecobank stock has increased 33 percent this year, giving the company a market value of 192.4 billion naira. The 10-member Nigerian Stock Exchange Banking 10 Index has climbed 24 percent.
“This is a storm in a teacup” considering the relevance to Ecobank’s financial performance, Adesoji Solanke, a Lagos-based banking analyst at Renaissance Capital with a buy rating on Ecobank, said in an e-mailed note. “Nonetheless we acknowledge that this generates some negative publicity.”
Amcon, which according to data compiled by Bloomberg owns 10.7 percent of Ecobank, was set up in 2010 after a debt crisis threated the collapse of Nigeria’s banking industry. It said it spent 5.6 trillion naira in 2011 to acquire non-performing loans.