₦airaland Forum

@ OP

What are your core values
What kind of person are you? What can you and can't you do?
The ball is entirely in your court

What happens to their all the staff they out-sourced to Ericsson?

NSE reports only N300 billion margin loan in Capital Market ;-N700 billion in Real Estate


The Nigerian Stock Exchange (NSE) has reported that only N300 billion Margin Loan facilities are with Stockbrokering firms in the Nigerian Capital Market (NCM); and about N700 billion in the hands of real estate developers.

Professor (Mrs.) Ndi Okereke-Onyiuke, the Director General/Chief Executive Officer (DG/CEO) of the NSE made this report today Tuesday July 02 2009 in Lagos Nigeria at the town hall meeting with the CEO’s of quoted companies on the Stock Exchange.

“Those that are telling you that Margin Loans is with Stockbrokers, it is only N300 billion that is with them, the rest of it over N700 billion are not with Stockbrokers” Prof. (Mrs.) Okereke-Onyiuke affirmed.

She further affirmed that the Banks loaned the money to people and institutions that are into Real Estate. “Capital Market money is sitting in Banana Island, all the buildings there were built from money in this Market” she said.

She asserts that people were borrowing money for Real Estate development which was the reason the NSE introduced the Real Estate Investments Trust (REIT) in order to encourage the growth of the Sector.

“Real Estate is a long term gestation period; we request that people borrow money from the long end of the Market, by introducing REIT in the Capital Market, people can get long term funds for building and selling, but they rushed to the Banks and borrowed money” she said.

Prof (Mrs.) Okereke-Onyiuke affirmed that many people where in the middle of the Real Estate development when the global meltdown struck.

The DG of The Stock Exchange confirmed that these people were able to access the Market because the Banks saw share certificates as shareholding and most sacred collateral for lending. “So they asked for your shareholding in Stocks as collateral for lending you money for Real Estate and people borrowed from Banks using their shareholding for other interests” she said.

http://www.proshareng.com/news/singleNews.php?id=7038

[size=14pt] NSE to change nominal value from 50 Kobo to N1.00 per share [/size]


The Nigerian Stock Exchange (NSE) is making plans to change the nominal value of prices of shares on the Nigerian Capital Market (NCM) from 50 Kobo to N1.00 per share.

Professor (Mrs.) Ndi Okereke-Onyiuke, the Director General/Chief Executive Officer (DG/CEO) of the NSE made this confirmation today Tuesday July 02 2009 in Lagos Nigeria at the town hall meeting with the CEO’s of quoted companies on the Nation’s Stock Exchange.

“We in the Exchange also want to adjust our nominal value to N1.00 instead of 50 Kobo share, it doesn’t make any difference in the money” she said.

Prof. Mrs. Okereke-Onyiuke confirmed that in Nigeria people do not pay in Kobo anymore. “When Nigerians quote prices, we don’t quote Kobo, our currency is in Naira” she affirms.

The DG of The Stock Exchange confirmed that this has been done on the Daily Official List of the NSE; “we no longer say 400 Kobo; but N4.00 when we report prices. So we will do that with the nominal value and it would no longer be 50 Kobo, but N1.00” Prof. Mrs. Okereke-Onyiuke said.

She further affirmed that this change would not be done alone, but in conjunction with The Securities and Exchange Commission (SEC) and the Corporate Affairs Commission (CAC). “We have to carry along SEC and CAC; because when you registered your companies it was at the nominal value of 50 Kobo” she affirmed.

Prof. Mrs. Okereke-Onyiuke assured the quoted companies will not pay any fee to effect this change when amending their registration with the CAC and the NSE. “The NSE will make sure that you are not charged any fees for the amendment in the registration” she said.

“This will take care of reducing the quantities of shares and it will make sense for any company that wants to do share reconstruction” she said.

Proshare


_{With the effect of the market crash(forget bearish trading),this move means the list of penny stocks on the exchange just got longer}

[size=14pt]     AP posts N7.15bn profit, pays N5.20k dividend [/size]




African Petroleum Plc, has returned a marginal profit rise in spite of the inclement business climate in the 2008 financial year.

The company posted N7.147bn net profit in the 2008 financial year as against N7bn in 2007, representing an increase of one per cent. Gross profit also rose from N16.96bn to N27.01bn, representing an increase of 59.30 per cent, while its operating profit increased from N8.3bn to N12.6bn.

According to a statement signed by the Company Secretary, Mrs. Elizabeth Idigbe, the results were due to sound forecasting.

The statement said this was done through AP’s reinvigorated business intelligence systems; excellent customer service delivery; and adherence to corporate governance as well as industry best practices.

The board’s proposal to pay N5.20 dividend per share has shown its commitment to the investing public inspite of the N5.5bn bank interest paid during the year.

According to the statement, the dividend pay-out is an indication that the current board of AP is determined to grow the company‘s business in order to sustain dividend payment to shareholders who endured the period of “no-dividend”, which AP went through some few years ago, before the coming of the present board and management.
Aside this, the number of shareholders that will benefit from the dividend pay-out have increased from 788,787,383 units of shares to 958,886,610, following the allotment of the last public offer and Rights Issue recently concluded.

The hybrid offer proceeds will assist in providing more working capital and pursue investments that will enable the company to deliver even better returns in future.

Proshare

Have you ever checked to see what happens to the bottom of the sole of your shoe after using them to drive for a whilewould you rather it happened to the soles of your feel HELL NO

lexandra:
Eighteenth!

Hey Xandra
Your birthday mates are Duroti,Prince Kevo,Kayraph,kel4eva and Disire

roblance:
whats the deally in here guys wats good

R U a September baby? then drop us your DOB,Just the day,we don't need the year

Judging by the mockery he's made of that position,I'd have said ,yes let them ride on,but when he's impeached,who are they going to select in his place,they're all an unserious bunch

Market cap dips into the 5 trillion region.We got to brace hard for uniform year end

I guess you're suffering from a bit of unforgiveness.Since you did not want to marry her in the first place but you were more or less stampeded into doing so.Therefore you feelhurt that the decision was not entirely yours that some other people made the decision for you.
You know what,your wife is a very loveable person,as you have not told us that she is sleeping around or any of those things that could really break up a marriage.She cries because she realises that despite what she too must have passed through (I can imagine all the snide emarks that may have been made to/of her since the matter of her pregnancy was in the domain of the public and your church) you're still acting as if it was her fault that she got pregnant.
Find a place in your heart to forgive your pastor and every other person you feel forced you to get married the way you did,and you'll discover how easy it'llbe for you to love this your wife,and I'm sure she'll notice it and will be eternally grateful for your change of heart(only then will she feel she owes you one,and God knows what happens to a man's life and his family when his wife feels she owes him a BIG ONE)

Now GO LOVE YOUR WIFE

Dis Guy:
the post will be 'released' shortly!

rasputinn

At least in the spirit of full disclosure and provision,a la Sanusi

Interesting responses;some very reasonable,while some are just plain stupid

Tudór:
Because the guy would keep pushing your head until you fall. . . . Some like t.b joshua even resort to physical assault all in the name of deliverance!

,,,,, and some are just funny

Heard Fiorentina has reduced their asking price for Felipe Melo to move to Arsenal and requested in addition that Eboue make a switch in the opposite direction also.That to me will be a very good deal

And what's all the story about Mlan planning a 65 million euros double raid on Adebayor and FAB4

Stecyyyy:
hurayyyyyyyyyyy. am born 8th of september

Saucekid,Mybad,lompi23 and Olori share your birthdate

Like somebody said,some pages ago,I really am more interested in who is leaving than who is coming in.There are some players who are already surplus to requirement in the team who need to make way ;like already,so we know who to buy

MrCrackles:
I am not a dud. . . . . double figure goal tally and assists disagrees with your comment as above!

Yea right,please remind me the name of that wonderful league you played in as I only remember your then stadium BEDMIRATES 
Carry go Brashy,nuffin do you

GO VENUSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS

dominic tj:
British top seed and world number three Andy Murrah lost to American Andy Roddict in the semi-final of men event.
The home favourite lost in front of fans who bought tickets for the match through their nose

Hey Andy blokey,there goes your Murraymania and a golden opportunity to land this grand slam.In the absence of my man RAFA,there was no other player in the men's category for me to root for hence I tried to cheer you on,but no dice.

kpele

Deleted as the issue has been resolved

Was there a coupla weeks meself and that Uduaghan boy is no joke

Well what can I say?
Sorry about Ronaldo that y'all sold,and sorry also for Benzema and Ribery that you've obviously missed out on

Overtake don overtake overtake
Come to think of it,was the acronym a harmless error or those Russians had meant something else

tonella:
dat chick na angel of darkness, she is fraud.how can someone pay 2000naira wen he hasnt seen d picture of d girls.elizabeth or wat u cal urself, mess off u stupid asshole chick,i wouldnt dare cal u.bad market

I can't believe somebody actually took this OP(who's obviously another yahoo guy that may or may not have a female accomplice)seriously
There's something inherently wrong with the psychology of most guys on nairaland.Why is it that once somebody makes any post about the prospect of cheap/easy sex,most guys swap their brains for their dic.ks and opt to think with the latter in a show of crass gullibility

[size=14pt]A tale of many bank ratings [/size]

By Clara Nwachukwu


July 1, 2009 05:08PMT
print email





Lack of transparency and non-disclosure of exposures to margin loans have subjected the Nigerian banking system to conflicting ratings by some financial rating institutions in the recent times.

The Nigerian public believes that banks' exposures could be more than the estimates of the Central Bank of Nigeria (CBN) which put it at between ₦800 billion and ₦1.2 trillion as at the end of 2008, given that the Capital Market is believed to have lost over 65% of its market value or an estimated ₦8 trillion ($54 billion) since March 2008, according to TheAfrica Report, a Paris-based publication of Groupe Jeune Afrique, reputed as France's third largest press export, which classified only four of 24 banks in Nigeria as strong.

The classification has created panic among Nigerian banks, especially those classified as "shaken" and "stressed," as reports indicate that bank customers are poised to make sudden decisions based on the strength or weakness of their banks.

Reactions to the ratings

Critics of the report say the criteria used in arriving at the ratings were not specified and therefore cannot be relied upon, adding that these should have been specified so that the report would not be seen as biased.

Bismack Rewane, the Managing Director, Financial Derivatives, a Lagos-based economic intelligence outfit, said he could not comment on the strength or otherwise of the report because he did not "know the assumptions used in arriving at the conclusions."

In his opinion, some of the ratings are at variance with other recent industry ratings, such as the one released by Fitch Ratings Ltd, a global rating agency, which says it is committed to providing the world's credit markets with independent and prospective credit opinions, research, and data. Mr. Rewane argues, "The findings should have looked at the exposures relative to the earnings and profit. I don't have a problem with the report in itself, but it is at variance with that of the Fitch rating of Nigerian banks. For me, I will place greater reliance on the Fitch rating because the criteria were specific."

He further notes that The Africa Report failed to distinguish between profitability, illiquidity and insolvency, saying, "These are different issues and in my own opinion, there are no illiquid or insolvent banks in Nigeria, because the CBN has said it would not allow any bank to fail and that their capital base are still strong."

Taking a cue from this line of argument, a top management staff of UBA Plc one of the nine banks classified as "satisfactory" notes, "To rate a bank you must use certain indices such as deposit base, loan portfolio, and profit ration. I have not heard of any bank in any branch, irrespective of the rating where customers cannot cash their cheques, no matter the value. When this starts happening, then you can begin to suspect distress."

The UBA source cautioned rating companies against random ratings without specifying the criteria so as not to cause panic in the financial services sector, adding that the banking industry was very important in economic growth.

A top official of GT Bank, one of the four rated as "strong," who refused to be quoted, also called for caution among rating agents, saying, "There have been so many bank ratings lately. There is the Fitch rating, JP Morgan, Akintola Williams Deloitte and Touché, and there with the others, and the ratings depend on the criteria used so a bank considered as strong in one rating could be judged as distressed in another."

He went further to say that the bank, irrespective of its ratings, has always prided itself on "the quality of our assets, costs to income, return on equity and efficiency ratios, which are usually positive."

Only one of the banks rated by The Africa Report as "shaken" or "stressed", Access Bank, responded to NEXT enquiries. A spokesperson for the bank said that there was no basis for the categorization. "What facts do they have from the CBN to support their claims? Nobody contacted us on any issue as such we have never had any liquidity or capital adequacy issue with the Central Bank."

Mr. Rewane noted that exposures alone could not determine the health of any bank, saying, "Certainly it would affect their profitability, but if the exposures have been provided for, when the capital market recovers, they will recover some of their values."

GT Bank on its part believes "the industry is still strong irrespective of the margin exposures, and there is no need for customers and investors confidence to be shaken."

But First Bank, also one of the four "strong" banks, thinks that such rating only goes to confirm the strength of the bank as a leader. A spokesperson for the bank, Helen Ogboh, said, "Even though we do not know what the criteria they used to arrive at their judgment, it just goes to confirm that we have maintained our lead over the years. We heard about the report yesterday [Monday] and today [Tuesday] we read it in some of the national dailies and we feel excellent that we are rated strong."


The Africa Report

Although the publishers of the report were still working out their response with regard to the criteria for the rating at the time of publication, they say on their web site: "The Africa Report covers issues closest to the hearts of Africans and international investors alike accurately, incisively and comprehensively. The Africa Report goes beyond the headlines to give you in-depth reportage and analysis from writers who know their way around Africa's fast-changing worlds of business and politics."

The report says the performance of the banks follows the fall in the prices of oil and the crash of the capital market, adding, "Some hold the CBN governor, Charles Soludo, responsible for allowing a host of bad banking practices to go unchecked. Fortunately, a growing number of banks are beginning to equate more transparency with better returns."

Below is the report's classification of Nigerian banks

STRONG BANKS

Diamond Bank
First Bank
GT Bank
Skye Bank


SATISFACTORY BANKS

Afribank
Citibank Nigeria
Equatorial Trust Bank
Fidelity Bank
Platinum Habib Bank
Stanbic IBTC
Standard Chartered Bank
United Bank for Africa
Zenith Bank


SHAKY BANKS

Access Bank
Ecobank Nigeria
First City Monument Bank
Intercontinental Bank
Oceanic Bank
Sterling Bank
Union Bank

STRESSED BANKS

First Inland Bank
Spring Bank (pending takeover appeal)
Unity Bank
Wema Bank



My BIG question is wherever did TAR get their facts from,admitted,so many of our banks are so exposed as a result margin loans,upstream/downstream petroleum financing,telecom facilities etc,but this whole report to me is a load of crap that I think the French just wrote to stir up panic in our banking and economic system.
Where were they when the Lehman brothers,Northern rock,Iceland bank,Bank of America etc either collapsed or was on the brink of doing so despite their hitherto fantastic ratings by western agencies and journals including TAR

Interesting times are really ahead with Sanusi holding sway @ CBN

[size=14pt] INTERVIEW: We’ve got to open up sources of capital to banks [/size]


LAMIDO SANUSI, the new governor of the Central Bank of Nigeria , lays out his agenda to restore confidence in Nigeria ’s banking sector, in an interview with MATTHEW GREEN, the FT’s West Africa correspondent. He spoke about his plans to open Nigeria ’s banks to foreign takeovers, tackle an overhang of bad debt from banks’ losses on the local stock market and tighten disclosure requirements. He also gave insights into his approach to monetary policy and delivering lower interest rates. Here are excerpts from the interview.

Sanusi
Q:There’s a huge crisis of credibility in the Nigerian banking sector, in the opinion of many analysts. It seems to many of the people I speak to that your fundamental task is to restore that credibility. How are you going to that?
A:In addition to the standard central bank duties of monetary policy and financial stability, I’ve set myself two primary tasks. The first one is restoring confidence in the financial system. The second one is slightly less conventional but it is actually playing an important role as an agent for development.
I think the governor of the central bank cannot be the governor of the Bank of England, and just talk about money supply and interest rates and inflation. The financial system plays such a pivotal role in the economy that the governor of the central bank has to see himself, even though not as a politician, as an important part of the government with a responsibility for delivering economic growth.
The financial system suffers from a number of sources. First there is a clear fact, which we’ve always known, that banks do have margin loan exposures (Ed: exposure to losses on the local stock market). Now, some of those banks have margin loan exposures that are not in any way fatal. Their profits this year may be less than their profits last year. Maybe some will make minor losses.
There are others that I think people believe will need help in terms of recapitalisation, or maybe some encouragement to merge and consolidate into stronger banks. The credibility deficit comes not so much from the fact that the risks have been taken, but from the fact that there has been a seeming failure to acknowledge that there are problems.
I think the market would understand if you acknowledged that there were some problems, if you disclose the extent of the problem, and if you are seen to be working professionally and diligently towards resolving those problems.
In my view the number of banks that need serious help is relatively small. Unfortunately a few of them might be systemically important, and therefore how it is handled in terms of communication, how it is handled in terms of prioritisation at this stage is extremely important so that in addressing the problem you don’t create a bigger one.

From what you are saying then it seems like there are several banks that you are concerned may be at risk of going under?
Not going under. I don’t have all the details, but before I came in here, for instance, there was a general sense that you had about Naira 800bn to N1trn in margin loan exposure. If those numbers are true and the market has crashed by 70 per cent, you would expect that, to be optimistic, maybe 50 per cent of that is non-performing: another 500bn. What you would then expect to see is something close to that to show up as additional non-performing loans in the books of banks. And if it is not showing up then we have got to find out where it is. Now whether or not a bank is at risk of going under depends on the distribution of that 500bn. It also depends on the amount of capital that the bank has. So if the bank has a lot of capital and has a large margin loan exposure, it may make a loss, but it will go on. If, on the other hand, its capital base is small and its got huge leverage and huge concentrations then, like other banks, it is at risk.
We have to go through a proper diagnostic phase and we have already started that.

FT: There’s a huge clamour in the market for more clarity on the size and shape of this (margin loan) problem. You mentioned that a diagnosis needs to be done. Could you expand on what kind of procedure you would envisage carrying out to do that?
It’s extremely important that whatever we do does not cause a panic in the system. We’re dealing with two different participants with completely different profiles and mindsets….You’ve got on the one hand the investors, and while many shareholders might just be retail shareholders a substantial part of the investments in banks is in the hands of institutional investors…These are generally educated, they understand finance and they would be extremely happy to have the full picture blown up in the newspapers so that everybody knows. But on the other hand you’ve got the millions of retail depositors who would easily just panic if you send out signals that this particular bank has a problem without putting in place the mechanism and the structures for resolving them. I suppose the communication strategy is extremely important as we go through.

FT: Are you saying that you are planning to launch an audit exercise under the aegis of the central bank to diagnose the scale of the margin loan problem?
Yes I am.

FT: How long would that take do, you think?
If we start immediately you could cover the 24 banks in six to eight weeks max.

FT: When are you planning to launch the exercise?
I have launched it.

FT: So in six to eight weeks you feel you’ll be in a much more confident position to really understand the scale of the margin loan problem?
Yes I think so. I will. In the interim we’ll be looking at the various options of how to handle them.

FT: But it sounds like you are not planning to make those figures public immediately upon completing the exercise?
I may actually. It depends on what communication strategy is adopted. I certainly would expect that long before December we begin to apply prudential accounting standards and we will continue to increase the disclosure requirements for banks.

FT: It sounds like you are planning to impose more stringent disclosure regulations quite soon?
Yes, we should be able to have full-blown disclosures by the time the financials end in December.

FT: When you say “full-blown” what do you mean?
We might, even before the December accounts, require certain things to be disclosed. How much is disclosed between now and December depends on how much risk we perceive to be to the system with too much information in public hands.

FT: Could you give me a sense now of what types of figures you’ll be requiring the banks to reveal at minimum?
I think at the very least, since margin loans are a problem, people should know exactly what percentage of the loan book is exposed to margin loans, they should know exactly what kind of proprietary positions the banks are holding and they should know what the value is and they should know which loans are performing and which loans are non-performing, those should form part of disclosure requirements.

FT: Are you talking about imposing mandatory IFRS on banks?
IFRS helps, as you know in First Bank we did convince the board to adopt IFRS. But it’s extremely important to understand that if the problem is the integrity of data being presented, then IFRS does not address that problem. If it is true -- and I’m not saying it’s true -- but if it is true that an institution presents significantly distorted figures….there is nothing that stops them presenting false numbers under IFRS.

FT: Will you be seeking to sanction any banks that you find have been manipulating their books?
You wouldn’t sanction a bank. You would as much as possible see what you can do about deciding whether certain individuals belong in this profession. The banks are so much bigger than individuals. It’s important, I think, for the investor to know that there are many stakeholders in financial institutions. The bank managing director is one person. These banks have millions of depositors, they’ve got millions of shareholders, they’ve got thousands of employees and they play a major role in the economy. In the event of finding out that a management team has been errant, it’s extremely important that in dealing with that problem we do not place the investors, the depositors, the employees and the economy at risk. It’s about that balance, but certainly we’re not going to ignore it.

FT: Some of the issues that we’ve been talking around in terms of transparency, in terms of separation between regulator and operator -- clearly you believe these things need to be improved. Why should we have confidence in your ability to manage it?
First of all, it’s important to note that while it doesn’t excuse what’s happened in this system, the issues of banks, and their numbers and their recklessness and regulation have been issues all over the world. The FSA has itself put up its hands and said ‘we didn’t regulate hedge funds, we didn’t regulate these products, we allowed banks to go into sub-prime mortgages’ and the British people have paid a price. Americans have faced the same situation. Nigeria is not unique in that respect in terms of the failure of regulation. What we’ve got to do is to do what everybody else has done, to put up our hands and say ‘guys we made a mistake’ and fix it.

FT: How will you ensure that the central bank as an institution can regain its credibility?
A lot depends on what we do. These problems are not going to be fixed in a week or two. You’ve got to deal with the immediate problems of liquidity and the survival of institutions. You’ve got to deal with the issues of solvency and capital adequacy.
You’ve got to deal with the toxic assets – and those are all complex issues, how do you take them out? And if there is a cost to be borne by the Nigerian people, where is that money going to come from at this time of economic meltdown. You’ve got to deal with long-term with risk management systems, risk-based supervision, how to deal with subsidiaries, cross-border transactions. It’s an ongoing process. The market begins to have confidence when it’s convinced that the regulator understands what these issues are.

FT: Would you consider bringing in an external actor such as the IMF which would help the central bank to perform these sorts of tasks in a way that would restore that credibility?
We work very closely with the IMF, and we would work closely even with private sector operators. I would work with the IMF, I would work with the World Bank, I would work with international investment banks who have experience in those areas, I would work with local investment banks and regulatory agencies, so there are a number of parties involved.
My primary responsibility at this point in time is to restore health and confidence in the system and not hasten its death -- it’s just that balance.

FT: Going back to the question of margin loans, you’ve said that you want to diagnose the problem. What are the options that you are looking at for dealing with these assets once you’ve figured out how big the problem is?
The first thing obviously is that banks have to recognise losses if they are losses. We’ve got to know how much is true capital that every bank has. We’ve got to look at the possibility of taking those assets off their books. If a bank has weak capital and it wants to raise capital, the investor might want to have clean balance sheet…That might mean sterilising those assets, holding them until the market recovers and so on.

FT: Are you considering the idea of creating an asset management company that would buy up these toxic assets?
I think it’s a very strong possibility, and it’s one of the options on the table. The only thing is that the asset management company, even if set up, would only take off assets after the owners have taken the hit. We’re not going to take on assets at cost. They’ve got to be properly written-down on the books of banks.

FT: If though there are some banks that have sustained so much of a loss that they can’t survive, what will happen to them?
My intuitive feeling is that there isn’t any bank that cannot survive in one form or the other, either in the form of getting some of the stronger banks to put in equity and merge with them or inviting foreign banks and letting them agree the conditions for them to invest capital and management and revive the bank. Fundamentally, these banks have large branch networks, they’ve got huge investments in infrastructure, they’ve got a wide and diversified customer base, they’ve got therefore access and potential for growth. Banking remains fundamentally an attractive business, and for that reason there is always the possibility of finding some solution.

FT: It sounds from what you are saying like there is a strong chance that there may be more consolidation in the sector as the extent of the losses at some banks become known?
That’s my feeling, that there will be consolidation, that’s what I think.

FT: How many banks would you like to see in Nigeria?
I don’t have a target. My sense is that we might end up with fifteen banks.

FT: This consolidation may be triggered essentially by the audit process that you’re doing. As the regulator, will you step in to encourage consolidation among certain banks if you feel that it is necessary?
I wouldn’t force any consolidation but I think it’s important to send out signals to the banks that may have difficulties that merging with stronger banks is certainly a very good possibility for saving themselves and saving their shareholders and their businesses. And we would try to create an environment that encourages that.

FT: As I understand it, under the current regulations, there is a limit on foreign ownership?
In theory, yes. The laws of Nigeria do not restrict that. The central bank obviously has the authority to approve. What we have today is that the central bank is not likely to support a foreign bank owning more than 10 per cent of a top tier Nigerian bank. That is something that in my view needs to be looked at again.

FT: Where would you like to see the upper limit?
I would not place an upper limit.

FT: So you would open the possibility that a foreign bank would acquire a Nigerian bank outright?
That’s the law, those are the laws that we have in Nigeria.

FT: Have you been approached by any foreign banks who are seeking to take a position in Nigeria?
I have not met any foreign bank.

FT: But it sounds like your vision for the sector then is perhaps, again, a different one from your predecessor . You are sounding like you would prefer to open the field very much to foreign players?
I think my vision has always been different from my predecessor’s. We’re two different people. On this particular matter, my view has always been different.
Look at this way, if you look at the register of many banks, you’ve got shares that are owned by nominees. Now I don’t know who these nominees are. And I believe under the laws in which they are set up, the nominees are not obliged to disclose the persons behind them. So if as governor of central bank I am okay to have a bank owned by nominees and I don’t know who owns them, why wouldn’t I be comfortable with a bank owned by a Barclays, or HSBC or China Construction Bank, who I know? For me it’s a no-brainer.
At the end of the day, the bank takes on the character of its owners. The greater transparency I have in the ownership of a bank, the better run that bank will be.

FT: How long do you think this system of auditing and then imposing tougher regulations and addressing the problems of the weaker banks will take before you have the sector on the sort of footing you would like to see it?
A lot depends on what kind of information we come up with. I have set myself a target of December, and the very latest March, to have concluded everything I need to do. We could just find that all that the banks need is to declare losses and they have got enough capital do that and we move on, or we could find there is capital that could be brought in either by the owners or by other people. Or we could find – and this is the reality – that some have started talking to other partners and they’ve just not disclosed it, and a time will come when they will announce that they are ready.

FT: Given that the central bank has allowed banks to reschedule their margin loans until the end of December this year, do you think that will serve to concentrate minds and make sure that these issues are tackled?
I don’t have any issues with restructuring, even beyond the end of this year. What is important is that if they are non-performing (loans) then they should be recognised as that. If they are restructured and all the income is taken in on the assumption that it’s going to come back then we are living in the dream that the markets will go back to the highs that they were at and that’s not likely to happen. We would work on the most conservative and prudential basis and see how things go.
But as a risk manager I can tell you that margin loans are not a problem they are a symptom. The real problem is weaknesses in risk management systems. You may find that a bank has serious margin loans problems but it also has other problems in other portfolios, whether its oil and gas or real estate and so on, so we don’t know.

FT: You’ve outlined measures that you want to take that will take a considerable amount of work presumably. Do you think the central bank itself actually has the institutional capacity to carry these out?
I did say that we are going to work with institutions like the IMF on capacity building. I agree totally that there are skills issues. I was a risk manager out there, and I used to tell the regulators that they never really asked me the right questions. Part of the advantage of me being here is that it is really an area where I feel pretty comfortable. I have made my own mistakes as a risk manager and I have learned from them. But I have also come from managing risk in a big financial institution therefore understanding how do you look out for the kinds of things that could place an institution at risk? I will try to pass on a lot of that to those in banking supervision and give guidelines on exactly what I want them to look out for.

FT: We’ve seen the central bank try to adopt measures in the past that have essentially been reversed under pressure from the banks themselves. What gives you confidence that you will be able to muster the political will to challenge the vested interests?
The first thing is that I am not a politically-connected person and I’m not part of any vested interests, but the fact that I was appointed by the president to this job would suggest that he is willing to have change. The personal assurances I have received from the president are that he would give me his total support in everything that I feel I need to do to sanitise the financial system. My sense is that he was concerned about the same questions you are raising, about concerns being raised about the credibility of the financial institutions, and he would like those to be addressed. At the moment I can only move on confidently with the support of the president.

FT: Could you envisage a situation where there would be government-appointed boards having to run some of these banks?
I would not like to have that. It would be a last resort. They’ve got boards. If you need to have a transition in the institution, the boards can appoint a new CEO. I don’t think there is compelling evidence that in the past having government officials managing financial institutions has worked. My preference is to get private capital.

FT: Are there steps that you might take that would encourage it?
I would send the signals that I would try to create as much as possible an environment that would make it possible -- if it means showing some flexibility, if it means giving some forbearance, if it means providing some incentives. On a net cost- benefit basis, if it is seen that those incentives, or those forbearances, would cost the Nigerian people much, much less than having to put in capital in those banks and then manage them, then I would make the recommendations. Ultimately, the decision as to how far the government will go is that of the president, and I will have to discuss with him.

FT: One could easily say that you’ve come here to clean up the system. Is that how you envisage your role?
In the short-term, that’s a role, but this is a five-year job, and the economy is a long-term issue. My role still remains the fundamental role of the central banker. I need to ensure we have price stability, I need to protect the value of the national tender, I would like to see that we push for lower interest rates and stimulate growth in the economy.

FT: We’ve got this current cap on deposits on lending at 15 and 22 per cent. Do you have plans to lift that?
I don’t think there’s a cap in the sense of the central bank saying ‘you can’t lend more than this’. The Bankers Committee met and it’s part of a discussion. I would probably use a lot of moral suasion…for banks to understand that the long-term growth and long-term survival of our banks will have to depend on stability and growth in the real economy, and that sometimes some decisions that may seem to take a hair-cut off today’s profits are not unwise if they are going to lead to long-term income streams. At the same time we’ve got to address some of the fundamental reasons for high interest rates.

FT: There is a perception in the market that these banks have had to agree to these caps on deposits and loans. Are you happy to see those limits continue in their current form or would you lean on the side of them being removed?
We will have to discuss at Banker’s Committee. What I would like to do is to see if we can have policies and ideas on how using purely market-based solutions, interest rates come down. I think 24 per cent is too high, as a lending rate.

FT: When do you think we will see the fully liberalised exchange rate regime restored?
I don’t want to say at the moment. The central bank has said three months, but I believe we should do it earlier, but I can’t say when.

FT: What is your vision going forward for the kind of monetary policy strategy you want?
I think if there is anything that central bank has done very well over the past few years it’s been monetary policy. We did have hiccups, naturally, during the meltdown, but monetary policy has been extremely good. The central bank has kept a hold on money supply. It’s grown because of the need to provide liquidity to the banking system, inflation is coming down. This is the second consecutive month it’s coming down. We will aim to see if we can bring it down to single digits by the end of the year. Obviously it’s a problem keeping inflation down, keeping interest rates down and having a strong exchange rate – the “Unholy Trinity” that economists always deal with. I would like to keep inflation down, and I would like to bring down interest rates, and then depending on what happens to the oil price, and revenues and capital flows, I would hope the Naira will hold. But long-term I think lower interest rates are far more fundamental than a very strong exchange rate.

FT: How does one move away from the current situation where the level of liquidity is very much hostage to the oil price? How can you build the institutional capacity now and policy responses that would mean in five years, or ten years, that Nigeria would be able to avoid the big shocks we’ve seen that have been driven by these fluctuations in the oil price?
Can you tell me one economy in the last eight, nine months that has not had exchange rate shocks? The United States, the dollar, the pound, the euro, the Russian rouble – none. We lived in abnormal times. What happened to the Naira happened to every major currency. It’s not an isolated incident and I would not like us to judge monetary policy by what happened to the Naira. While personally I think that some of the controls that were introduced were not totally necessary, they were nothing in terms of what Russia introduced or Ukraine. We never had capital controls in the strict sense. You know we are living in abnormal times and what we need to do is to move as quickly as possible back to normality and not to panic.

FT: Isn’t the problem that the policy has been up to now to peg the Naira to the US dollar and having this pegged currency to some extent restricts your room for manoeuvre in terms of monetary policy?
I don’t think we’ve ever had a peg. There’s been stability. It’s been a managed rate in order to manage expectations because of the large amounts of imports. There has been an attempt to have some semblance of stability. I think we had a situation in which it was very clear that the stability around the band that we had was not sustainable given where oil prices were. We are very fortunate that there seems to be a reversal, I don’t know how sustainable that is.
But we need to understand that the exchange rate in Nigeria has been a sensitive issue primarily because the elites take an interest in it.

FT: Isn’t the problem in Nigeria that the monetary policy is to a large extent hostage to fluctuations in world oil prices. What I am asking is what’s your vision for say, five years down the line, to shape monetary policy in such a way as to break that link?
I don’t think it’s hostage to world oil prices, but it’s hostage to fiscal dominance. So for example, if the government had actually implemented or continues to implement the ideas on fiscal responsibility, where you would have a budget that’s based on an assumption of an oil price, and anything over and above that price actually goes into an excess crude account, and then that is used to supplement any shortfalls, you would have greater stability in terms of money supply. But if the government chooses to spend all the money that it gets when the price goes up and then ends up with nothing when the price goes down then you get those fluctuations. It’s not so much the price of oil, but greater harmony between monetary and fiscal policy and greater fiscal discipline.

FT: Some people say that the level of coordination between the finance ministry and central bank has really withered recently. Would you agree with that?
Yes, I agree with that totally. I think the “autonomy” of central bank has been taken to an extreme where it’s almost an island on its own. My own idea is that the central bank governor is a part of government and I would work very closely with the finance minister.

FT: How big a systemic risk do you see to the banking system at the moment?
I don’t see a risk that we cannot manage. I think there are stress points, and we’re trying to dimension those stress points. We will release information to the market. Some of that information will be released by the banks themselves. We will ask the banks to release that information. We appeal for a little time. We appeal for confidence and trust. But we don’t think there’s any reason to panic.

FT: Where would you like to see the Naira?
Even after total liberalisation and de-regulation, if oil prices hold firm there’s no reason why the present official rate cannot be a good target for a liberalised rate.


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