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  #201 (permalink)  
Old 10th February 2009, 06:35 AM
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Default Re: Quarterly Results

Global Financial Crisis: Nigerian Banks Walk a Tight Rope E-mail
Written by Lucky Fiakpa
Monday, 09 February 2009

Falling oil prices, dwindling government revenues, less deposits for banks as well as the credit crunch could make 2009 one of the most difficult banking years for the Nigerian banking sector in history, Lucky Fiakpa writes

The unfolding scenario, brought about by the global economic crisis is beginning to give some bankers cause for worry. Some are beginning to think that year 2009, could be one difficult one except the economic environment change for good and this is not for nothing. Falling oil prices could translate into dwindling revenue for the government leading to less deposit for banks which depend on the public sector for bulk of their deposit liabilities.

The credit crunch has also triggered reduction and re-pricing of credit lines from foreign banks. All of these have implications for balance sheet growth and profitability. The banking industry is faced with relatively high operating costs occasioned by decaying infrastructure like power, transportation, security among others, as well as a shortage of skilled manpower for the new business areas that banks are entering into these days.
Arising from this scenario, the immediate past managing director and chief executive of First Bank of Nigeria Plc, Mr. Jacob Moyo Ajekigbe, recently noted that if the financial market is to witness any meaningful development then the Federal Government and other stakeholders must work towards the stability of the economic situation of the country.

According to him, it is the state of the economy that drives the development of the financial market, especially the banks. “You cannot separate the performance of the financial institutions in Nigeria from the state of the economy. It is very essential that relative stability of the economy is ensured at all times, as threats to macro-economic stability could bring about adverse consequences to the banking industry,” he said.

Ajekigbe would want the government to address economic issues promptly, stressing that for the financial services sector to move forward, an overhaul of infrastructural services in the country was imperative. “A reform of critical infrastructure support is imperative, and more reforms are required to unleash the potentials in credit, (mortgage, consumer finance) and payment system (e-banking)”.

Mr. Andrew Alli, Chief Executive Officer, African Finance Corporation (AFC) has also warned of a difficult time in 2009, stating that funds would be scarce, banks would be reluctant to give out loans, banks and corporate organisations would not be able to access long time financing, putting the growth and development of the economy in jeopardy.

The managing director and chief executive officer of Skye Bank Plc, Mr. Akinsola Akinfemiwa, has something similar to say on the issue. Speaking to Financial Vanguard in Port Harcourt, Rivers State, during the bank annual general meeting, Akinfemiwa admitted that year 2009 could be a tough one for the industry. “This year is going to be tough. But for us as a bank it is a good time to show capacity and to show who we are that this year’s performance is not just a flash in the pan.

“It could be very interesting surviving in a harsh environment that we have now. It brings the best out of people. I believe what is happening in the world, is just going to make my people, staff and board a lot better and produce even better result in the face of very grim economic conditions,” he said.

Banks Toxic Assets

But the Managing Director of the Financial Derivatives Company, Mr. Bismark Rewane, does not think it will be that smooth. There is a feeling that banks that should have been facilitators to the re-positioning drive of the weak economy have been diagnosed by the experts as being in a terribly weak position, posing even severe dangers to the economy.

The experts linked the problems of the banks to the heavy impairments of their balance sheets, which started from the credit crunch in 2007.

Rewane said even though monetary policy stabilisation programmes and fiscal stimuli are necessary to help restore confidence in the local economy, a comprehensive and broad solution to the problem rests on addressing the question of toxic assets tumour sitting in the balance sheet of the banks.

Rewane, who delivered a paper on macro-economic developments in the global financial markets and the impacts on the Nigerian economy in 2009 at a seminar organised by Access Bank Plc, said it is only when the assets that have gone bad are corrected that Nigeria can expect positive changes on the local economy. “Some of us are of the view that the surgical removal of the tumour and parking it in a special purpose vehicle to be called bad bank or bad fund and treated as a long-term facility for both liquidity and accounting purposes, will help relieve the pressure on the banks” he said.

The renowned economist and member of the federal economic team inaugurated by the government recently added: “It is only after the poor assets position of the banks is resolved that the fears of the bruised Nigerian investors will be alleviated and the economy back on ground.”

Rewane said owing to policy summersaults and imbalances in the structure of the local economy, Nigeria is as at today one of the most ravaged by the global crisis among the comity of nations. “The Nigerian stock exchange is now the worst performing globally, going by the indicators in 2009. The stocks have lost more than 30 per cent in January alone and are selling 2.5 per cent times earnings and cheaper than Russia” he said.

Also speaking, Executive Director, Access Bank, Mr. Ebenezer Olufowose, said arresting the problems plaguing the financial sector was tantamount to jumpstarting the domestic economy.
He said the fact that market capitalisation have dropped from over N12 trillion it was in 2008 to about N4 trillion this year just as the All Share Index that leapt to over 63,000 basis points in 2008 is now below 23, 000, means the economic pitfalls are alarming and requiring the attention of all stakeholders.

SEC Position

Only last week, the Securities and Exchange Commission, SEC, director-general, Mr. Musa Al-Faki, represented by SEC Executive Commissioner Legal and Compliance, Mr. Charles Udorah, at the Forum of Accountants-General in Abuja pleaded with the Federal Government to acquire controlling interest in sick banks and companies quoted on the NSE in order to boost confidence in the market.

“Government intervention by acquisition of substantial or controlling stakes in critical but mismanaged companies and dealing with corporate managers found wanting will engender the required confidence to draw investors back to the market.
“The intervention will also bring about the required stability in the system required to refocus financing towards the real sector,” he said.

Although SEC has disowned the statement made by Udorah, it was based on the fact that stockbrokers owed banks a staggering N388 billion and this money was obtained from the banks without real collateral, indicating that they might never be recovered.
“A lot of the brokers are stuck with loans and the banks are stuck with liquidity problems,” Al-Faki said.

The Minister of State for Finance, Mr. Remi Babalola, however described the call by SEC, asking the federal government to take over “sick banks” as baseless. Babalola who stated this while fielding questions from journalists in his office in Abuja, said there was no reason for such calls because the “fundamentals of the banks are still very strong” and such calls were capable of creating unnecessary panic in the system.
He said it does not make any sense to acquire a company that was doing well stressing that the up and down movement of stock prices has little or no effect on the performance of a given company.

“When Flour Mills of Nigeria’s stock, for instance, sold for N106 per share, what did it profit the company? Now that it is selling for less than N20 how does that affect the performance and operations of the company? Babalola asked.

He said for as long as the company is not in distress and it is making profit and paying dividend, why should anyone be talking about taking it over, he asked.
For now, he further said, the only institution that can talk on the health of the banks is the Central Bank of Nigeria, CBN, and so far, “Professor Chukwuma Soludo, the CBN governor, has maintained the banking industry is sound and healthy”.
He wondered why the government should move to take over a bank with a sound balance sheet, making profit and paying good dividend.

SEC director-general, Mr. Musa Al-Faki, represented by SEC Executive Commissioner Legal and Compliance, Mr. Charles Udorah, at the Forum of Accountants-General in Abuja on Monday had said that it was time for the Federal Government to take controlling interest in sick banks and companies quoted on the NSE in order to boost confidence in the market.
“Government intervention by acquisition of substantial or controlling stakes in critical but mismanaged companies and dealing with corporate managers found wanting will engender the required confidence to draw investors back to the market.
“The intervention will also bring about the required stability in the system required to refocus financing towards the real sector,” he said.

Vanguard Online Edition - Global Financial Crisis: Nigerian Banks Walk a Tight Rope
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  #202 (permalink)  
Old 10th February 2009, 12:43 PM
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Default Re: The Banks

Quote:
Originally Posted by iluvstocks View Post
I think interest rate is high because inflation (as calculated by the CBN) is still high. we cannot have interest rate below inflation. I don't know what the MPR is right now but my understanding is based on the MPR, there is an upper limit to what banks can charge for interest. So we can't totally blame it on the banks as far as the rates go. I agree the banks can always get you through back door fees.
As per liquidity problems, I was only going by what Bode Agusto wrote. It is possible he doesn't have all the facts.
As per buy backs, I think it will help reduce the number shares floating around and it will pump much needed funds into the market. It might even help bring back confidence in the market especially from foreign investors. Best of all, it just puts to rest all this speculation about banks going bust because of their exposure to the market.Just imagine each bank buying a billion shares of their stocks. Wow, that will put the "on bid" label on that stock for 2 months.

The current MPR is 9.75%, NIBOR rates are close to 12% showing a decoupling from the MPR. Fixed deposits are yielding close to 14% while bank loans are going for 22% and above. I don't think there is an upper limit to what banks can charge when inflation at 15% is much higher than MPR. Interest rates are rising because of inflation and I remember when the CBN dropped the MPR from 10.25% to 9.75% at a time when inflation was around 13%, I shouted blue murder that these people are going to make things hard for us.

http://www.stockmarketnigeria.com/fo...-post2366.html
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  #203 (permalink)  
Old 10th February 2009, 09:57 PM
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Default Re: The Banks

Quote:
Originally Posted by knightofdelta View Post
The current MPR is 9.75%, NIBOR rates are close to 12% showing a decoupling from the MPR. Fixed deposits are yielding close to 14% while bank loans are going for 22% and above. I don't think there is an upper limit to what banks can charge when inflation at 15% is much higher than MPR. Interest rates are rising because of inflation and I remember when the CBN dropped the MPR from 10.25% to 9.75% at a time when inflation was around 13%, I shouted blue murder that these people are going to make things hard for us.

http://www.stockmarketnigeria.com/fo...-post2366.html
Who is giving 14% for fixed-deposit? UBA is robbing me at 9%. And does one have to deposit 10mil or something for such high interest rate?
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  #204 (permalink)  
Old 11th February 2009, 04:26 AM
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Default Re: The Banks

Quote:
Originally Posted by iluvstocks View Post
I think interest rate is high because inflation (as calculated by the CBN) is still high. we cannot have interest rate below inflation. I don't know what the MPR is right now but my understanding is based on the MPR, there is an upper limit to what banks can charge for interest. So we can't totally blame it on the banks as far as the rates go. I agree the banks can always get you through back door fees.
As per liquidity problems, I was only going by what Bode Agusto wrote. It is possible he doesn't have all the facts.
As per buy backs, I think it will help reduce the number shares floating around and it will pump much needed funds into the market. It might even help bring back confidence in the market especially from foreign investors. Best of all, it just puts to rest all this speculation about banks going bust because of their exposure to the market.Just imagine each bank buying a billion shares of their stocks. Wow, that will put the "on bid" label on that stock for 2 months.


It is difficult to Imagine First bank coughing out 18 Billion to buy First bank stock. The Shareholders may send the CEO for a drug test after that!
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  #205 (permalink)  
Old 11th February 2009, 04:28 AM
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Default Re: The Banks

Quote:
Originally Posted by slydomber View Post
Who is giving 14% for fixed-deposit? UBA is robbing me at 9%. And does one have to deposit 10mil or something for such high interest rate?
UBA seems to treat shareholders like Princes and depositors like trash. How long can this business model hold up?
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  #206 (permalink)  
Old 11th February 2009, 08:04 PM
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Default Re: The Banks

Banks raise liquidity through promos 11/2/2009



Banks are familiar with promotional campaigns as they try to get the attention of their numerous customers. The motive goes beyond rewarding customers. In actual fact, their motive for embarking on such campaigns is to increase their deposits base and further bridge the liquidity gap caused by the current global financial crisis

Banks are embarking on promotional campaigns to boost their retail operations and further close the liquidity gap created by the current global financial meltdown.

Though banks, on account of the consolidation had strong liquidity and, by extension, operational capital, the liquidity level for most banks has reduced due to the global financial crisis.

In recent times, banks have been contending with the problems of financing big-ticket transactions due to factors such as recession in the capital market and the global liquidity squeeze. The 24 banks have lost substantially since March, 2008 when the nation’s capital market started experiencing recession. The banking stocks that peaked in 2005 have lost their values. The effects are low shareholders’ funds and operational capital in banks.

Besides, the current global financial meltdown has compounded the woes of the banks. Foreign banks that had arrangements with Nigerian banks have pulled out their investments. The banks based their action on the need to assist their parent companies in Europe and the United States. The development has left a deep gap in the operations of the banks. Many banks can no longer meet their obligation to give loans to their customers, save for the high net worth business operators that are ready to finance the loans at much higher rates.

Also, the capacity of the banks to finance big-ticket transactions has reduced. Of importance are the off-shore transactions that many banks have to forego due to the global meltdown.

The development has made banks to devise means of increasing their deposits via various promotional campaigns. In the past one year, the banks have become familiar with promotions as they are falling over one another to win more customers. At the last count, eight banks have organised promotions to reward customers or, better put, win more customers.

The banks are: FirstBank of Nigeria Plc, Platinum Habib Bank Plc, Spring Bank Plc, United Bank of Africa (UBA) Plc, Oceanic Bank International Plc, Fidelity Bank Plc, Access Bank Plc and Ecobank Nigeria Plc.

The promos came under various names to appeal to the emotions of customers. These include: "Save and Win Promo", "Go win promo", "Grand Slam promo", "Save empowerment promo", "Fly and win promo" and "Savers Harvest promo", among others.

The promos are accompanied with prizes, such as automobiles, office and household equipment, and cash. The cash prizes are relative, depending on the bank and the amount of money owned by the customers.The cash prizes are between N250,000 to N10million.Diamond Bank has a grand prize of N50million. The prizes are tempting, making customers to develop interest in the promos.

Often times, the messages are laced with warning to make customers open new accounts with the banks and further participate in the promos.

Interestingly, the banks are wooing customers to their sides by liberalising the procedures for opening new accounts with them.

Documents such as national identity cards, international passports, electricity bills and guarantors, preferably owners of current accounts have been waived to ensure that more customers participate in the promos. Also, the banks have waived the accounts’ opening fees to encourage more people to participate in the promos.

Many banks only request for the identity card and two passport photographs of the customers as conditions for opening new accounts. Diamond Bank Plc and Ecobank Nigeria Plc fit into this category.

The Head, Retail Banking Group, Ecobank Nigeria Plc, Ms Oyejoke Giwa, put the issue in a better perspective.

Speaking during the launch of the Ecobank Savers Harvest promo in Lagos, she said customers who want to participate in the promo must produce two passport photographs only.

She listed other conditions for participating in the promo to include: the presentation of a student identity card, an account holder with the Ecobank Nigeria Plc as guarantor, or an account holder with any other bank.

She said the bank put in place a liberalised way of opening new accounts to ensure that many customers are rewarded.

Ms Giwa is not alone as other banks have trod a similar path. Many banks argue that customers have remained the secret of their success and as a result, they must make them happy by offering them gifts.

From the foregoing, certain inferences can be made. First, banks have realised the importance of keeping and maintaining customers to facilitate their operations.

Second, banks have realised the need to adjust the rules to accommodate a large customer base for growth.

Third, there should be a subtle way of crowding deposits to help banks during a critical period.

Whichever way one looks at the issue, the motive behind the decisions of the banks to organise promotions is beyond material rewards. The underlining motive is to ensure that banks collect more deposits from short-term savers and further increase their liquidity.

A bank official, who refused to be mentioned, said the global financial crisis is having an untold effect on the banks. The source said many banks are contending with the problem of low liquidity due to the crisis.

He said the banks are adopting a stop-gap approach by sourcing for money through the promotions. He stressed that no serious bank would come out and declare that it is organising promotions to win more customers, adding that the promo is one of the marketing strategies that companies employ to win more customers.

The Head, Retail Banking, Platinum Habib Bank, Mr Olu Akanni, said the promo is a way of connecting the bank to the community in which it operates.

Akanni said the bank is important to the community, adding that this is the Bank PHB’s way of ensuring bonding with its immediate community.

Akanni’s statement speaks volumes of the trend in the modern banking industry where the success of banks is determined by the relationship they have built with their customers over the years.

Banks, since consolidation, have been trying to build new relationships and at the same time maintain old ones to ensure growth. One way of ensuring this is to organise promotional campaigns for their customers.

Through this means, banks are achieving two objectives. They are increasing their deposits and making their customers feel a sense of belonging.

But beyond this is the ability of the banks to retain their customers after the promotions.

Cases abound where customers seize the opportunity of the promotions to open accounts with some banks. These are short-term depositors and likely not to keep the accounts after the promo.

This poses a great problem to banks as they have to contend with dead accounts.

Ms Giwa said Ecobank Nigeria would not have any problem keeping its customers as the bank has provided convenient ambience and formidable products to keep them. Other banks have similar facilities in place to retain their customers after the promos.But the question is: How realistic are these measures?

.AKINOLA AJIBADE reports.
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  #207 (permalink)  
Old 11th February 2009, 10:24 PM
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Default Re: The Banks

Quote:
Originally Posted by Michael View Post
UBA seems to treat shareholders like Princes and depositors like trash. How long can this business model hold up?
Not very long
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  #208 (permalink)  
Old 11th February 2009, 11:18 PM
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Default Re: The Banks

Quote:
Originally Posted by knightofdelta View Post
Not very long
Please, if anyone knows a bank with a better interest rate than what i'm getting at UBA (9%), let me know.
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  #209 (permalink)  
Old 12th February 2009, 05:50 AM
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Default Re: The Banks

5 Nigerian Banks Make World’s Top 500 Brands
By Emele Onu, 02.12.2009

Five Nigerian banks have been ranked among top 500 banking brands in the world in the 2009 report by The Banker Magazine, published by the Financial Times of London.
The Nigerian banks are First Bank of Nigeria Plc, Intercontinental Bank Plc, Union Bank of Nigeria Plc, Zenith Bank Plc and United Bank for Africa Plc.
They were ranked 315th, 334th, 392nd, 395th and 449th banking brands respectively.
The Banker assessed the financial institutions using brand value, market capitalisation and brand rating, among others, as parameters.
In the methodology used, The Banker obtained brand specific financial and revenue data of every bank ranked.
It modelled the market to identify market demand and the position of the individual bank. In the third step, it established the royalty step of every bank, after which it calculated the future royalty income stream of the organisations as well as the discount rate specific to each bank.
In the final analysis, it discounted the future royalty stream to get the brand value for each bank.
Four Nigerian banks that made this year’s list have consistently emerged as the country’s industry leaders since the banking industry reforms introduced by the Central Bank of Nigeria (CBN) in 2004.
The emergence of Nigerian banks on the global benchmark was attributed to the impact of the industry reform and recapitalisation, which boosted the strength of the Nigerian banks against global competitors, and also prompting a few of them such as UBA, First Bank, Union Bank, Interconti-nental, Zenith, Access Bank and Guaranty Trust Bank to open overseas subsidiaries in London and other African countries.
The report saw HSBC of UK retaining its number one position followed by Bank of America, which moved from number three position and Wells Fargo also of USA moving from all the way from number eight to three.
Rupert Kemp, a brand finance analyst, said in the report in The Banker: “Smaller brands in the emerging and developing markets have outperformed the heavyweights.”
Some analysts said the rankings buttress the strength of the Nigerian banking sector, especially its capacity to withstand present market turmoil and contribute to the nation’s economic development.
The Banker had in its 2008 world ranking of banks attested to the geometric rise of Nigerian banks on the global rating.
It said: “Nigerian banks’ total tier one capital has more than doubled to $11.29 billion in 2008 (from $5.38 billion in 2007), and that, consequently, Nigeria’s share of sub-Saharan tier one capital has risen to 34 per cent, from 24 per cent in 2007.”
In contrast, The Banker said, “South Africa’s share dropped to 62 per cent, down from 71 per cent, over the same period.”
The CBN Governor, Professor Chukwuma Soludo, had at various fora maintained that Nigerian banks are strong, healthy and robust.
“Nigerian banks have shareholders funds of about N2.7 trillion as at September 30. 2008, which is about 821.50 per cent higher than the N293 billion cumulative funds of the 89 existing players pre-consolidation,” said Soludo.

This day
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  #210 (permalink)  
Old 12th February 2009, 09:24 AM
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Default Re: The Banks

Savannah Bank: Return of justice

Vanguard Online Edition - Savannah Bank: Return of justice
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Old 13th February 2009, 05:05 AM
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Default Re: The Banks

Financial meltdown: Bank director urges FG, stakeholders to evolve practical solutions
By Segun Olatunji, Kaduna
Published: Thursday, 12 Feb 2009

The Executive Director, Commercial and Relationship Banking, Unity Bank Plc, Alhaji Lamis Dikko on Wednesday in Kaduna said that the Federal Government should urgently convene a meeting of the banking and private sectors as well as other stakeholders in order to deal effectively with the current global financial crisis.

This, Dikko said would enable Nigeria to evolve a more practical way of bailing out the nation’s economy from the negative effects of the current global financial meltdown.

He stated this while speaking with journalists at the end of a brief ceremony where his bank donated an 18-seater Toyota Hiace bus to the “I Care Women and Youth Initiative”, a pet project of the wife of the Kaduna State Governor, Hajia Amina Namadi Sambo, in Kaduna .

According to Dikko, such a meeting has become imperative because of the peculiarity of the Nigerian economy, which deserves the most appropriate response from government and all other stakeholders.

He said, “It is not just the banking sector that has been affected. It is the whole capital market. The value of the shares trading on the capital market has come down from about N13tn to just a little over N4tn. Yes, you may say banking sector because it still holds about 65 per cent of the value of the entire Nigerian stock market. To that extent, you may say banking. But generally, it is a problem that has affected the entire economy.

“But again, it’s also not a peculiar problem to Nigeria. It is something that is worldwide. It is part of the global economic challenge that is being faced right now. I think Nigeria, like other countries, will need to identify the peculiarities of our own problem and come up with solutions that are peculiar to us to resolve the problem.

We need to sit down and decide what is going to be ab initio our response to the global economic crisis of which the fall in share prices is only a portion.

“So, I think it is something that affects not just the banking sector alone but also the entire economy. And it behoves on the government, the entire private and banking sectors to sit down and see really what is the most appropriate response that we can make to the global economic crisis.”

On the bank’s donation of the bus to the “I Care Women and Youth Initiative,” the Unity bank boss said that the gesture symbolised the bank’s continued recognition of the efforts of the governor’s wife to the less-privileged in the society.

Dikko disclosed that in the area of funding projects as part of its Corporate Social Responsibility, the bank had spent a total of N205.3m from June 2007 to date, adding that this placed the bank in the top five in terms of CSR amongst its counterparts in the country.

He expressed the hope that the bus would assist in driving the lofty goals of the Kaduna governor’s wife’s pet project and stressed that the task of eradicating poverty in the society was a daunting one that would require the concerted efforts of the government, the public and private organisations, as well as individuals to make it a reality.
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"The one absolute requirement of a money manager is emotional maturity. If you don’t know who you are, the stock market is an expensive place to find out." - Adam Smith
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Old 14th February 2009, 02:17 AM
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Default Re: The Banks

CBN to sanction banks CEOs violating foreign exchange rules’ 14/2/2009

AkinolaAjibade

The Central Bank of Nigeria (CBN) has declared zero tolerance on banks, promising to blacklist banks and their Chief Executives found contravening foreign exchange rules.

CBN declared its positions on forex matters yesterday, immediately after the Bankers Committee meeting in Lagos. The meeting was convened to discuss issues of exchange rate, inflationary and interest rates mechanisms that have been giving financial market regulators serious concerns in the past few months..

The Bankers Committee meeting had in attendance the CBN governor, Chukwuma Soludo, his deputy in charge of Surveillance Services, Tunde Lemo and the Chief Executive officers of 24 banks.

Soludo, while briefing the media on the outcome of the meeting said agreements have been reached to blacklist any of the Chief Executive Officers of banks that flout the rules governing the foreign exchange operations. He added that treasury managers of banks found culpable of such offences would also be blacklisted.

" We are aware of the consequences of the depreciation of naira’s value and the attendant abuses of the currency. We are declaring zero tolerance on infractions in the forex market. We would blacklist banks including their Chief Executive officers and their treasury managers who circumvent the rules of the market," he said.

Soludo said the objective of such measure is to restore stability to the foreign exchange market.

According to him, since last year when the naira started depreciating against the dollar, the apex bank has put in place measures to restore the value of the nation’s currency.

He said that CBN is not unaware of the activities of the speculators that are contributing to the drastic fall in the value of the naira emphasizing the apex bank’s position on foreign exchange trade; "banks must only buy forex for their customers to prevent speculations and other sharp practices in the market," he said.

CBN positions fall in line with the allegations of round tripping, among other abuses that the forex market has been subjected to and the needs to curb the excesses of the perpetrators of such practices.

Soludo said that Nigeria is having over $50billion external reserve that is enough to support the exchange rate.

On the margin trading, he said that there is no way CBN can regulate it because it is a global thing
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Old 14th February 2009, 02:38 AM
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Default Re: The Banks

Banks angry over clampdown on forex deals
Posted Thursday, February 12, 2009

By Sunday Ojeme

SOME bank treasurers on Wednesday expressed dismay at the latest directive by the Central Bank of Nigeria that banks should desist from reselling foreign currencies sourced from either the Retail Dutch Auction System the inter-bank foreign exchange market.

Those who spoke with our correspondent argued that the directive was an attempt by the Governor of the CBN, Prof. Chukwuma Soludo, to visit the global economic frustration on the banks, saying that foreign exchange dealings remained one of the sources where banks made their money.

According to one of the sources in a first generation bank, “We have nothing to be afraid of here. But for the CBN to come down on the banks like that is difficult to explain.

The banks are already used to trading at the inter-bank market, and as much as possible, they have been doing it according to the CBN guidelines. To come out now and suddenly put a halt to it is something else.”

Another banker observed that the action of the apex bank was to indirectly close the inter-bank market to enable it mop up foreign currencies from multinational firms and other sources before reselling to the retail banks, adding that the new rule was likely to encourage more shady transactions among some dealers.

Barely 24 hours after the directive, it has started telling on the sector as the inter-bank market remained closed throughout Wednesday.

The CBN, in a circular on Tuesday, said all foreign exchange purchases from its window and other sources must only be used for customers and not on the inter-bank market.

According to the circular, signed by the Acting Director, Trade and Exchange Department, CBN, Mr. B. Musa, “All purchases of foreign exchange by authorised dealers, whether from the CBN window or from other sources, shall be for the use of customers and shall not be used for inter-bank transactions.

“Any such funds purchased by authorised dealers and which is not sold to customers for eligible transactions within five working days, shall be surrendered to the CBN for repurchase at the latter’s buying rate.”

The circular further stated that the price at which the CBN would be prepared to buy foreign exchange should not be no more than one per cent below its immediate past selling price at the RDAS, adding that the buying and selling rates by authorised dealers should not be more than one per cent around the CBN rates.

It also added that the buying and selling rates by the bureaux de change should not be more than two per cent around the CBN rates.

The regulator also enjoined authorised dealers and BDCs to ensure compliance with the provisions of the circular as any breach would attract appropriate sanctions.

Some analysts were of the opinion that the situation might lead to a further depreciation of the naira as the directive could create massive parallel market.

The tell tale signs manifested at the black market on Wednesday where the naira exchanged for N153 to the United States dollar as against N147 it had maintained at the inter-bank market for about two weeks.

The CBN is, however, prepared to forestall any sharp practices that will result in the naira crashing further especially within the formal forex market.

On Monday, the apex bank commenced investigations into the activities of a bank that was alleged to have been involved in abnormal forex dealings.

Our correspondent also gathered that efforts were underway to convince the CBN to reverse the new decision as top treasury managers and chief executives of banks were already in touch with the management of the CBN to discuss the full impact of the decision. -Punchng
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Old 15th February 2009, 05:16 PM
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Default Nigerian Banks Expanding Fast

THE EXPANSION drives of Nigerian banks and insurance companies operating in Ghana seem not to be affected by the current global credit crunch, as many of them continue to open more branches across the 10 regions of the country.

Investigations indicate that all the six Nigerian banks in the country have in the last three months added an average of three new branches to their networks at a time businesses across the globe are downsizing their workforce and closing down some existing operations.

United Bank for Africa (UBA), the first Nigerian bank to begin operations in the country, grew its branch network by more than 60 percent in 2008. On the whole, the bank opened 10 new branches last year, extending its operations to Aflao, Takoradi and Kumasi. Both Intercontinental Bank and Zenith Bank embarked on similar expansion drives outside Accra.

Intercontinental Bank’s latest branch, an imposing edifice at the Kwame Nkrumah Circle, is expected to begin operations before the end of January, according to an official of the bank.

Similarly, Amalgamated Bank Ghana Limited, a subsidiary of Oceanic Bank Nigeria plc, recently opened a branch on the Osu Oxford Street.

One of the fastest growing commercial banks in Nigeria, Access Bank, is expected to start operations in Ghana later this year.

The bank obtained its operating licence in November 2008 and is already recruiting staff and acquiring properties ahead of its formal opening.

Also, the bank is said to have gotten the green light from the Bank of Ghana after paying an amount of $100 million, twice the minimum capital requested by December 2009.

The pace of expansion is expected to continue this year, given that the banks will witness more capital injection as the December 2009 recapitalisation deadline for foreign banks operating in Ghana draws to a close.
Analysts, meanwhile, are projecting a 50-percent rise in the number of employees of these banks by the end of 2009.

International Energy Insurance (IEI) which began operations in Ghana last year is leading the pack among Nigerian insurance companies presently embarking on the expansion of their branches.

The company is already building three new branches in Tema, Kumasi and Takoradi, all of which are expected to be commissioned by March, according to Roseline Ekeng, Managing Director of the Ghana subsidiary.

Analysts point to the recapitalisation exercise in both the banking and insurance sectors in Nigeria as the magic wand that made the current continental expansion possible.

UBA, Access, and GTBank plc are among banks of Nigerian origin that currently operate in a number of African countries.

From Business Desk
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Old 15th February 2009, 08:29 PM
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Default then they are healthy.

Then who says our banks are ailing even as they are buying up choice locations and erecting magnificent edifices. These assets will add to their capacity to increase profitability. Go banks go! At least NEPA cannot stop these guys.
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Old 15th February 2009, 09:45 PM
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Default Re: then they are healthy.

Quote:
Originally Posted by invisible! View Post
Then who says our banks are ailing even as they are buying up choice locations and erecting magnificent edifices. These assets will add to their capacity to increase profitability. Go banks go! At least NEPA cannot stop these guys.
Hmm... seems you have not learned from the sub-prime saga.
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Old 15th February 2009, 10:24 PM
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Default Re: The Banks

Sub prime saga or Nigerian imperialism, dont dampen my fun, my banks are growing bro!
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Old 16th February 2009, 08:37 AM
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Default Re: The Banks

Fear of foreign investors grips capital market
Written by Peter Egwuatu
Monday, 16 February 2009

*As market loses N7.8trn in 10 months

LAGOS—INDICATIONS are rife in the nation’s capital and money markets that foreign investors with enough funds to invest are warming up to effect a significant takeover of the nation’s blue-chip companies by mopping up their stocks which prices have plummeted to an all-time low as a result of the global financial meltdown.

This is because prices of equities continue to plunge on a daily basis with investors losing N7.8 trillion in 10 months. Market capitalisation at the Nigerian Stock Exchange (NSE), had dropped by 137.7 per cent from N12.6 trillion in mid-March 2008 to close on Friday at N5.286 trillion.

As a result, market operators were anxious that should the decline continue till the end of the first quarter of this year, the commanding heights of these companies may be taken over by foreigners, especially as some of them were re-entering the market to take advantage of the market meltdown, seeking to buy stocks at rock-bottom prices.

Vanguard reliably gathered that some foreign financial institutions had started re-considering their positions to re-enter the stock market as new funds had started flowing into select Nigerian banks.

It would be recalled that in the heat of the global financial crisis last year, foreign banks acting as correspondent banks to Nigerian banks recalled credit lines of about $5 billion.

Vanguard, however, gathered that some foreign banks had reconsidered their decision and had begun re-extending funding to select Nigerian banks.

A capital market source said last week: “Some of the foreign banks have started showing interest in the market as share prices continue to plunge. If this continues, there might be hostile acquisitions or mergers should a foreign investor mop up to 30 per cent of any company’s shares at the secondary market.”

Sources close to some of the foreign banks said though they have reduced the volume of resources available to Nigerian institutions, a few banks had been considered for continuous deployment of their funds given their pedigree and yield in the Nigerian market which is more impressive than developed markets.

Meanwhile, one of the beneficiary banks, Intercontinental Bank Plc, confirmed this development when it received fifty million euros, or $66 million Developmental Credit Facility window for education and health sectors of the Nigerian economy from the European Investment Bank (EIB) recently.

An official of the bank said some of the foreign banks that had earlier last year withdrawn from Nigeria when they faced credit crunch in their home countries are now coming back to re-invest in the Nigerian economy through select Nigerian banks.

In the last five years, EIB had invested about euro179 million in various projects in Nigeria through its financial partners.

The new line is to be disbursed to small and medium sized enterprises (SMEs), under Intercontinental Bank’s special product scheme, I-CARE. It is set aside to finance their working capital requirements, capital project financing and debts re-financing, among others.

NSE had already warned quoted companies, especially banks to buy back their shares or face hostile takeovers following the ongoing stock market meltdown.

Assistant Director-General of NSE, Mr. Musa Elakama, said: “the current problem we are having in the stock market is because the offers exceed the bids. There are more offerings than bids. We are saying that companies should come to the floor and buy their shares back.

Such shares must be bought and when they are bought, must be cancelled, and the companies involved now make return to Securities and Exchange Commission (SEC), NSE and Corporate Affairs Commission (CAC).

“It is very simple and to me it’s a quick-fix solution to the current crisis,” he said.

He stressed that the companies that must buy back their shares must do so with their cash reserve, not by borrowing money.

Elakama explained further: “The company must be solvent, meaning it must be a good going concern without any problem of liabilities and the members must approve it and get the sanction of the court to do that.

So, all these processes are simple and straightforward. If all these banks and companies are actually posting the profits they claim to be posting in their books, which they are publishing everywhere, which means they have enough cash to do that, unless what they are telling us is not true that they do not have all those profits.

Because the difference between the net profit and cash balance is usually the non-cash entry in the books like provision for bad debt, amortisation.

“If you remove those ones, the net profit and cash must always be the same thing at a given moment. I’m an accountant apart from being a lawyer.

So, if they have the profit they claim they are having, then, they should have excess cash to come up with and buy back their shares properly on the floor and such shares when they are bought should be cancelled. Unless what they are saying is not true that they are making such fantastic profit.

“If they are posting correct results then they should not have any problems with liquidity, they should come and buy back their shares and it is a way to demonstrate confidence in their own shares to other investors.”

Elakama, who spoke on television recently, said none of the companies quoted on the exchange had come to buy back their shares.

Answering question on how share-buy back can be applied in this critical period, he said: “Share buy-back to me is not a new issue at all; it is in the Companies and Allied Matters Act (CAMA). It is described as capital deduction from Section 105-109.

So, it has been there. But, because of the market meltdown, we suggested that it will be a quick-fix solution to the present problem, and everybody embraced it, including SEC, even the Minister of Justice embraced it.

“The way it works is that you need to maintain your share capital for two reasons, which are for the benefit of shareholders and your creditors, because they rely on that as their insurance. If you have to reduce that capital, it must be done properly. First, your members must approve it, and the Annual General Meeting (AGM), must approve it.

You must get the sanction of the court to do it. And, what we are suggesting is that companies have to buy back their shares from the floor. And, any such shares so bought must be cancelled, because if they are not cancelled then it could be abused,” he added.

Concluding, he said: “The prices of these stocks are low now; it gives an opportunity for them to do share-buy-back, because, if, for instance, a company is trading at N300 per share and now the price falls to N100 per share it is easier to do a share buy back and take advantage if the companies have the cash.”

Vanguard
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Old 18th February 2009, 03:09 AM
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Default Re: The Banks

Outrage as CBN lends to some banks at 11%
Wednesday, 18 February 2009 00:28 BY OUR REPORTERS

The Central Bank’s expanded discounted window through which it acts as lender of the last resort to the nation’s banks was opened a bit wider some months ago but access was initially fixed at an outrageously low eleven percent per annum, Business Day has learnt.

Almost a trillion Naira was extended to the banks since September when access through the window was eased but some bankers thought it was unwise and indeed curious that the Central Bank will extend credit to banks at eleven percent interest rate at a time when deposits could command as much as 16 percent or even 17.

Expectedly, a deluge of requests came in from the banks, some simply because they could not just sit there watching their competitors profit from a seemingly unusual handout from the lender of last resort.

Our reporters learnt that after a string of protests to the apex bank, the rate at which banks accessed funds through the discount window was then raised but some of the banks which came after the rates were raised are shouting foul.

Much of the funds have now been returned by the banks which interpreted the jump in the rate as signalling the end to the party and frolic to which they have been indulged by the Central Bank, even if for a time.

According to another banker, “the Central Bank is meant to be lender of last resort and it was wrong to reward those who came to it,” a treasurer with one of the nation’s leading banks told BusinessDay. “All over the world, when you reach out to the lender of last resort, what ever you get is at a premium. But here banks were to all intents and purpose being rewarded instead of being punished.”

This is now being presented by critics of the apex bank many of who believe that the CBN has not been as firm as it should be with the banks and who now call for a thorough overhaul of its oversight role.

In addition to the rate at which the funds were initially given to the banks, there is also the issue of transparency. So far, the Central Bank has not published the list of banks which benefited from the largesse nor has it been willing to make public the criteria that it set for beneficiary banks.

In its response to BusinessDay enquiries, the Central Bank did not provide the criteria but it acknowledged that the window was expanded with an extension of the tenure from 90 days to 360 and with the “inclusion of other instruments such as commercial papers and bankers acceptances.”

According to the CBN, “the expansion became necessary as part of its monetary policy response, which was publicly pronounced with the intent to ease off possible credit crunch in the Nigerian banking system and as a pre-emptive measure to guard against the ugly experiences of most banks in Europe and the United States since the global financial crisis.”
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Last edited by hispy99; 18th February 2009 at 03:12 AM.
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Old 19th February 2009, 12:12 AM
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Default Re: The Banks

Private jets not luxury for bank chiefs –CIBN
By Yemi Kolapo and Bosede Olusola-Obasa
Published: Wednesday, 18 Feb 2009
The Chartered Institute of Bankers of Nigeria has said there is nothing wrong with chief executives of banks owning private jets.

The President, CIBN, Mr. Erastus Akingbola, said while briefing journalists in Lagos on Tuesday, that private jets for bank chiefs were no luxuries, adding that they would only facilitate their time-demanding jobs.

This statement came against the backdrop of allegations that chief executive officers of banks were squandering shareholders’ funds on flamboyant lifestyles with their new jet acquisition frenzy even when returns on investment were dwindling.

Investigations by THE PUNCH revealed that about four chief executives of top banks in the country owned jets, even though commercial airlines manage the planes on behalf of the banks.

A reliable source at the Nigerian Civil Aviation Authority, who could not confirm immediately the actual costs of the jets owned by the bank chiefs, however, said the private jets, which had capacity for between six and nine passengers, were new acquisitions that would cost a minimum of $20m (N300m), aside other costs.

Our correspondents’ investigations revealed that the United Bank for Africa Plc owns a Cessena Citation jet, managed by Virgin Nigeria, while Zenith Bank Plc owns a HS 125-800XP, managed by Arik Air. It was also discovered that Oceanic Bank International Plc owns two HS 125-800 jets, while Guaranty Trust Bank Plc has a Challenger 306 jet, managed by Kings Airlines and Travels Limited.

A reliable source at Bank PHB also hinted that the bank would soon join the league of jet owners following an order it had placed for a private jet.

However, in spite of the strong views that some banks were not being prudent with the expensive acquisitions, Akingbola, who doubles as Group Chief Executive, Intercontinental Bank Plc, said it was in order for them to own jets so long as they had not been found to have engaged in sharp practices.

He said, “Yes, I know some of my colleagues have jets. Once they have not been found to have stolen money; once their banks are stable; and as long as they can give returns to their shareholders, there is no problem. It is a common thing abroad. My prayer is that one day, some of your editors will be so successful that they will equally have private jets.

“I don’t have one yet. But let me say this; owning a jet is not a luxury. Why? I charter aircraft for the day because sometimes I want to touch three states because my diary is so full. So, if I can use that day productively by owning a jet, it is better. There was a day I was in four states in one day because I had an aircraft. I was able to achieve a lot that day and return to Lagos in the evening. So, it is not a luxury.

“We should not pray for Nigerians to be poor so that the economy will thrive. People must succeed.”
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