Daily Independent (Lagos)
Kingsley Ighomwenghian
6 July 2009
(Page 2 of 2)
"The criteria used by the magazine should be ascertained. It is not enough to state that a particular bank is safe or distressed. You cannot stay in Paris and write what you like. Such reports are counter-productive, not only to the sector but also to the economy," he said.
A national daily reported Olu Akannmu, Senior Vice President, Retail Banking at Bank PHB, as agreeing that there is no reason to believe the report, just as Segun Akintemi, General Manager, Businness Optimation, at Skye Bank, while reacting rather calmly to the report, noted that although his bank was not operating in isolation, it's not ideal to judge or categorise banks in such a manner as The African Report had done.
"I am not disputing the content of the report, but CBN had said all 24 Nigerian banks are strong. Though some may be stronger than others, there is no trace of distress. I think we should just give the new governor time to settle down," he added.
While not in a hurry to comment on the report, a source reacting to the report through a blog, cautioned that not all that glitters is gold, hence the need to get answers by asking, for example, the source of the data, parameters and benchmarks used to evaluate the banks, especially profit after tax not before tax, liquidity ratio and others as a direct result of the global financial crisis that began two years ago.
"As an economist, (I am aware that) financial and economic variables tend to fluctuate overtime due to external shocks, and that could cause a structural change. Economic decision-makers, market-watchers and speculators didn't realise the effect of inertia until strong and stable financial institutions like Northern Rock in the UK, Fannie Mae, Merrill Lynch and American Insurance Group, all in the United States, fell out of the market with only a FG bail-out plan and stimulus plan to hope on.
"If you are in the field, you would understand that no bank would want to show the consumers that all is not well. (Some will chant all manner of slogans) in a bid to stay afloat. All those income statements and balance of sheet being published on the dailies are inverse reflections of the in-thing. I could go on and on because the debate has not even started yet," the blog wrote.
The report in contention, according to another source, may not also be too different from similar fears expressed by Lamido Sanusi at recent a book launch, when he reportedly noted: "For instance, as at the last count, the banking sub-sector still accounted for about 65 per cent of the capital market capitalisation of the Nigerian Stock Exchange (NSE), about 90 per cent of the financial system assets domiciled in the sector, while the private sector credit of about N8.12 trillion as at February 2009, was more than the combined spending by the three tiers of government."
Proshare NI, an online financial medium, also picked holes in the report beginning from its not being available on a continuous basis for everyone to make reference, just as it did not "confirm its target audience, source of information of corroborative data/bases" upon which it concluded the report.
"The development raises concerns both in terms of veracity of the publication as does the role of appropriate corporate communications of the CBN and NDIC, who are in better position to confirm the status of the banks. The pronouncements of the CBN governor since assumption of office might inadvertently have created substance for the believability of such a publication or any other. It is therefore incumbent upon the regulators (CBN, NSE, NDIC, SEC) to work together to create a common platform for managing market confidence.
"This, we believe, can be achieved through the enthronement of a disclosure driven reporting system that helps analysts, journalists, players and the investing public avoid such alarms. Our antecedents as a market in the time past make such a publication 'almost believable'. The way forward is for the market to define acceptable standards in disclosures," Proshare NI added.
One fact that cannot be glossed over in the industry today, according to sources, is another round of consolidation in the industry, coming after the feat achieved by Stanbic Nigeria Bank and IBTC Chartered Bank to form Stanbic IBTC Bank. There is also the lingering merger of Bank PHB with Spring Bank, following the acquisition of majority interest by the former, even as many continued to question the manner of the acquisition, insinuating that the deal was done under the table with the connivance of both the CBN under the immediate past governor, Professor Chukwuma Soludo, and the Securities & Exchange Commission (SEC) then under Musa Al-Faki.
Okey Nwosu, managing director Finbank, was quoted some months ago as saying that a new phase of market-induced consolidation was in the offing to enhance efficiency and profitability in the industry.
"Yes, discussions have started going on among the industry operators on mergers and acquisitions. This type of merger we are likely to see this time around may not be regulatory authority-driven, but it makes sense because it will lead to more profit and efficiency in the sector. This is the time institutions come together for greater efficiency and this has started happening in the U.S. In Nigeria, I see greater opportunity for mergers and acquisitions in the banking sector and it will happen soon," he had said.
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