Banking
Two Major Battles Ahead of Tier-2 Nigerian Banks
Dipo Olowookere
Last month, Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, announced at a media briefing that he would likely force deposit money banks in the country to increase their minimum capital base from its present level within the next five years.
The last recapitalisation of the banking sector was in 2004 under the leadership of Mr Charles Soludo as CBN Governor.
During the exercise, the central bank raised the capital base from N2 billion to N25 billion and for those who could not meet this requirement on their own, they had to merge with others or were acquired by bigger financial institutions.
Since the announcement by Mr Emefiele on June 24, 2019, shareholders of some banks, especially the tier-two and three, have been wondering what could happen next to their companies.
In fact, there was a recent report that Access Bank, which merged with Diamond Bank in March 2019, was planning to acquire Union Bank of Nigeria Plc. But both banks have denied the rumour, saying there was no iota of truth in it.
Though the CBN is yet to announce what the new minimum capital base would be, there are indications that it could be raise by over 100 percent and for some struggling banks, this might be the end of the road for them.
For shareholders of the banks in this category, this is one of the major challenges that might prove too difficult to surmount.
At the last recapitalisation, some financial institutions had to approach the stock market to raise funds to meet the new CBN requirement.
It is not certain if some banks having their share value badly damaged would attract sympathy of their shareholders in raising fresh capital via rights issue or any other means available this time around.
Another critical issue identified by Business Post facing some mid-level banks at the moment is the recent pronouncement by the CBN that deposit money banks in the country should give out 60 percent of their deposits to customers as loan.
Since the apex bank said financial institutions must have a loan-to-deposit ratio of 60 percent by September 30, 2019, many lenders have been devising ways to meet the requirements.
It is however, important to note that four of the five tier-one banks have LDR less than 60 percent.
But these big players in the sector have the capacity to pay for the sanctions stipulated by the central bank for failing to meet up by September 2019.
This may not be the same with these struggling tier-two banks, who are still finding it hard to remain in business because of their Capital Adequacy Ratio (CAR).
Apart from Access Bank Plc, which has an LDR of 69.9 percent, every other banks in its peer are below the 60 percent requirement of the CBN.
GTBank has an LDR of 53.1 percent, First Bank has an LDR of 47.4 percent, UBA has an LDR of 47.9 percent, while Zenith Bank has an LDR of 50.1 percent.
How some tier-two banks will solve the two aforementioned challenges is what some observers would be waiting to see with keen interest. Will their shareholders come to the rescue? Only time will definitely tell.
By Modupe Gbadeyanka
About N3.6 trillion has been repaid to the Central Bank of Nigeria (CBN) by the Asset Management Corporation of Nigeria (AMCON) since its inception in 2010.
This information was revealed by the chief executive of AMCON, Mr Gbenga Alade, during a media parley to update the press on the activities of the agency.
Mr Alade said at the moment, the organisation still owes the central bank about N3 trillion for toxic assets of banks in the country.
He praised the organisation for its asset recovery drive, stressing that when compared with others across the world, Nigeria has done well.
“It is important to stress that the corporation has done tremendously well, especially when compared to other notable government-owned Asset Management Corporations around the world.
“Based on the balance at purchase, AMCON outperformed other Asset Management Corporations all over the world by achieving over 87 per cent in recoveries despite the unique challenges associated with debt recovery in Nigeria.
“The Malaysian Danaharta, which is adjudged one of the best performing Asset Management Corporation’s, only achieved 58 per cent. The Chinese Asset Management Corporation, despite its stricter laws, achieved just 33 per cent.
“Only the Korean Asset Management Corporation (KAMCO), South Korea, has achieved more recoveries than AMCON, with about 100 per cent. This was due to their brute force with which they chased the obligors.
“Despite KAMCO’s recovery records, the agency is still operational to date with slight realignments in its mandate.
“Other noted Asset Management Corporations that have transitioned into a perpetual institution of the various governments include, China Asset Management Company, Federal Deposit Insurance Corporation (FDIC) USA, and KFW Germany.
“So, gentlemen, without sounding immodest, AMCON has done well, and we will not relent until all the outstanding debts are fully realized,” Mr Alade stated.
On the financial performance of AMCON, he said last year, the firm posted a revenue of N156.25 billion and operating expenses of N29.04 billion, while for the 2025 fiscal year should be a revenue of N215.15 billion and operating expenses of N29.06 billion.
By Modupe Gbadeyanka
One of the non-interest banks in Nigeria, The Alternative Bank (AltBank), has opened a new branch in Effurun, Delta State.
The new office will serve the Edo-Delta region and provide purposeful banking and real financial empowerment for individuals, entrepreneurs, and businesses, a statement from the firm stated.
The lender disclosed that the Effurun branch is a bold move in its mission to reshape banking in Nigeria.
The launch was graced by key dignitaries, including the Ovie of Uvwie Kingdom, Emmanuel Ekemejewa Sideso Abe I; the Chairman of Uvwie Local Government, Anthony O. Ofoni, represented his vice, Andrew Agagbo; and the Special Adviser to the Governor of Delta State on Community Development, Mr Ernest Airoboyi; amongst others.
The Divisional Head for South at The Alternative Bank, Mr Chukwuemeka Agada, emphasised the institution’s commitment to Warri and its surrounding communities.
“By establishing a presence here, we are initiating a transformation in the way banking serves the people of Delta. Our purpose-driven approach ensures that customers’ financial goals are not just met but exceeded,” he stated.
“This branch represents our pledge to empower Warri’s dynamic businesses and families, providing them with the tools to grow without compromise,” Mr Agada added.
“We understand the heartbeat of this community, and we are excited to integrate our bank into the fabric of this dynamic region,” he stated further.
On his part, the representative of the Ovie, Mr Samuel Eshenake, challenged the bank to facilitate development and employment within the Effurun community.
The Regional Head for Edo/Delta at The Alternative Bank, Mr Akanni Owolabi, embraced this challenge, pledging that the bank will work sustainably to drive local commerce.
“At The Alternative Bank, we are committed to being an active partner in the development of Effurun. We see this branch as a catalyst for creating opportunities, driving employment, and supporting the growth of local businesses.
“Our mission is to empower this community, ensuring that every step forward is one of progress, prosperity, and shared success.”
By Aduragbemi Omiyale
A partnership aimed to enable seamless, real-time and secure transactions for cardholders across Africa and the rest of the world has been entered into by Payattitude and PAPSSCARD, the card scheme initiative of the Pan-African Payment & Settlement System (PAPSS).
The collaboration will allow Payattitude cards issued by banks and other deposit-taking institutions to be co-branded with PAPSSCARD, Discover, Diners and Pulse for acceptance across their networks in Nigeria, Africa and worldwide.
As an initiative of the African Export-Import Bank (Afreximbank) and a key financial infrastructure supporting the African Continental Free Trade Area (AfCFTA), the PAPSSCARD scheme will facilitate instant cross-border payments in local currencies.
“This partnership reflects our commitment to cross-enterprise alliances and enabling inclusive, efficient, and borderless payments across Africa and the world
“With Payattitude, Nigerian cardholders and financial institutions can now enjoy the benefits of a Nigerian card that can be used worldwide,” a director at Payattitude, Dr Agada Apochi, said.
The acting chief executive of PAPSSCARD, Mr John Bosco Sebabi, said the aim is “to connect African payment ecosystems, reduce the cost and inefficiencies of cross-border payments, and strengthen African sovereignty over payments infrastructure.
“Collaborating with Payattitude, a key innovator in Nigeria’s payment space, represents a significant step towards a more unified African payment landscape.”
The chief executive of PAPSS, Mr Mike Ogbalu, said, “By bringing together PAPSSCARD’s robust cross-border payment capabilities with Payattitude’s leadership in the Nigerian digital payments, we are taking tangible steps toward building a single African market where individuals and businesses can transact easily and securely, both within and beyond Africa.”
Payattitude is the first-in-kind Nigerian Payment Scheme to pioneer multibank App and USSD Code *569#.
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