Despite several attempts to stay on top the myriad crises trying to stunt its growth, Keystone Bank is still struggling for life.
Sadly, the once-vibrant financial institution has become a shadow of its former self. A visit to most of the branches scattered across Lagos revealed a bank with low patronage. The once-bubbling Ogba branch in Lagos has become a shadow of its old self. Even customers avoided the ATM like an accursed child everybody is afraid to identify with.
Interestingly, a visit to its popular branch on Agege Road clearly revealed that the bank is only waiting for an undertaker to perform its obituary. Why? The multi-million naira property belonging to the bank has been converted to a worship centre.
The planned sale of Keystone Bank Limited, by the Asset Management Company of Nigeria (AMCON), may upset the relative calm that has attended the nation’s banking industry for some time. This is made more complex by the uncertainties that the proposed sale has generated, as anxiety mounts within and outside the bank among employees and other stakeholders over what appears a jigsaw puzzle the exercise would be confronted with.
Keystone is one of the three nationalised banks that emerged from the carcass of their progenitor establishments following the liquidation of the latter in the aftermath of the 2009 bank reform. The other two nationalised lenders, Enterprise Bank and Mainstreet Bank, were sold to Heritage Bank and Skye Banks respectively by AMCON in the fourth quarter of 2014 for a combined sum of N181.1bn, after bidding processes that lasted several months..
Heritage Bank won the bid to acquire Enterprise Bank for N56.1bn, while Skye Bank was announced as the winner for Mainstreet Bank with a bid of N125bn. The banks were formerly Bank PHB (now Keystone Bank); Afribank (later Mainstreet Bank) and Spring Bank (later Enterprise Bank). The progenitor establishments were nationalised in August 2011 after they failed to meet the recapitalisation requirements as stipulated by the CBN then under Malam Sanusi Lamido Sanusi as Central Bank governor.
Their nationalisation triggered controvery and series of litigations that are yet to settle, creating deep wounds in the minds of those who found themselves on the loser side, while the operators were also rattled by the outcome of the development. In the process, some interest groups, mainly shareholders of the former Bank PHB (now Keystone Bank), headed for the courts to stop AMCON from selling the bank, which they claim was wrongfully taken from them by the Central Bank under Sanusi. While the controversy and resultant litigation raged, AMCON embarked on the process of selling Keystone in line with its mandate, which led to the transfer of ownership of the two other nationalised banks.
Some shareholders of the defunct Bank PHB Plc that headed for a Federal High Court in Lagos included Benedicta Oyiana, Ifeyinwa Oyiana, Chioma Onyiana, Okoli Dumebi and Felix Onyiana. Others were Pius Okonji, Okonji Obiageli, Ndiwa Uwaonye and Allwell-Brown. The plaintiffs are claiming that they were not duly compensated when the bank’s assets were transferred to Keystone Bank Plc. They are demanding N38.6bn from the defendants, being “fair compensation” to them for the value of their investment in the defunct Bank PHB Plc.
They are also praying the court to award N20bn as damages against the defendants in their favour, to cover for the loss of value on their investments in the defunct bank. They further sought an order of the court setting aside what they described as “unlawful nationalisation, compulsory acquisition and expropriation of their investments in Bank PHB”.
In their papers before the court, they contested the validity of a letter dated August 5, 2011, written by the NDIC to the Managing Director of Bank PHB, informing him that the bank’s assets and liabilities had been transferred to Keystone Bank. According to them, such a transfer amounted to an illegality when the NDIC did not make any arrangement for their compensation prior to the move. But AMCON appears set to commence the sale of Keystone Bank in the second quarter of the year. In January, the bad debt manager announced that it would put this into effect soon after the general elections earlier scheduled for February (now shifted to March and April).