Six of the country’s banks are ready to conclude the processes for their recapitalisation in the next two weeks.
Central
Bank of Nigeria (CBN) director of banking operations, Sam Oni,
disclosed this at the end of the Bankers Committee meeting held
yesterday in Abuja. He noted that with the progress recorded so far with
the regulators intervention with the ongoing reforms in the banking
sector, four banks would conclude discussions on the issue before the
end of the week,, while two others will follow in the next two weeks.
“The
Central Bank of Nigeria (CBN) intervention in the banking sector, which
led into a lot of reforms, has recorded a lot of progress since August
last year. By the end of this week, four of those banks considered very
important in terms of their systemic impact would have concluded the
deal on their recapitalisation, in terms of signing the memorandum of
understanding (MOU) with their partners. Before the end of the next two
weeks, two others would also reach that stage,” he said.
He, however, refused to mention the names of the affected banks.
This
milestone, Mr. Oni said, would serve as an assurance that the country’s
banking system is “no longer facing any systemic risks to the nation
economy, though there are other areas, like political risks and
security, that the government would need to address to support the
system, to make Nigeria an attractive investment destination to
investors.”
Managing
director, Citibank Nigeria, Emeka Emuwa, said the meeting resolved to
ensure that banks continued to support some critical sectors of the
economy, including power sector, infrastructure and agricultural
development, by building capacities to understand how to finance
projects in those sectors.
Though
he said approval was given, subject to further discussions on
modalities for the implementation of the policy, the Citibank boss said
each bank would be expected to set up desk within their organisation to
build capacity and expertise in assessing the risks and offer advisory
services on financing to the agricultural sector.
“It
is very risky to invest in the agriculture sector. It requires
specialised skills to deal with the risk in the industry. Therefore,
banks have resolved to build capacity, competence, and skills to be able
to provide the facilities required in the sector be able to adequately
assess the risks and render expert advisory services to investors in the
sector, he said.
According
to the managing director, United Bank for Africa (UBA), Phillips
Oduoza, though agriculture remains the highest contributor to the
country’s gross domestic product (GDP), only less than one per cent of
the annual industry loan portfolio has always gone to the sector,
announcing that the meeting resolved to increase the allocation by
dedicating at least 3 per cent of the total loans package for this year.
On
efforts to deepen the foreign exchange market, Mr. Oni said the meeting
approved guidelines to help in dealing with forward contracts, to avoid
speculation activities, adding that with the growth being experienced
with demand on corporate bonds, most organisations would begin to see
corporate bond as a means of financing their long term financing needs.
On
non-interest banking (Islamic banking), the CBN director said, with the
guidelines issued recently, most banks are ready to establish it either
as a full-fledged bank or subsidiary of a bank or a service provided
through a special window, given the number of unbanked population in the
country.
“It
is not a religious issue, but a viable product that people can
patronise, irrespective of their religious affiliation. This is a
product that has been there for a long time, which Nigerians can benefit
from. Over a trillion dollars of assets are in Islamic banks in 300
banks in 45 countries worldwide,” Mr. Oni noted.
