Author Topic: INVESTORS HINT ON LOBBY TO REVERSE BANKING CONSOLIDATION  (Read 1416 times)

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INVESTORS HINT ON LOBBY TO REVERSE BANKING CONSOLIDATION
« on: June 27, 2008, 05:30:38 PM »
A strong lobby is ongoing in government quarters to reverse the banking consolidation that raised the minimum capital base of banks to N25bn, the House of Representatives has being told.

?We are aware that there is a serious lobby to reverse the consolidation of banks and allow family banks back into the financial sector,? the President of the Independent Shareholders Association of Nigeria, Mr. Sunny Nwosu, said at a conference of business leaders and members of the House of Representatives in Abuja.

The Speaker of the House of Representatives, Mr. Dimeji Bankole, said he was not aware of such a move but added that the consolidation of the banking sector had not benefited the country as earlier promised.

?We were told that after the banking consolidation, the banks will be big and have enough money for onward lending to the private sector, but we have not seen such. The interest rates are still high,? he said.

His comments, in spite of denials of the lobby, sparked fears that the lower legislative chamber might endorse any proposal seeking to quash the banking reform.

In 2005, Nigeria concluded its banking reforms after slashing the more than 80 banks to 25.

The reforms earned Nigeria BB-rating by global rating agencies such as Fitch and Standards & Poors with foreign direct investments of about $13bn in 2007.

?We need to be watchful never to reverse this policy because it has given a positive image to the country,? Nwosu said in a telephone interview on Thursday.

He maintained that the consolidation of the banking sector had made the industry stronger and more equipped to face global challenges.

?Besides, we must avoid policy summersaults because it is not good for our country,? he added.

Since assumption in office on May 29, 2007, President Umaru Yar?Adua?s government had embarked on several policy summersaults including the reversal of privatisation of refineries and the Ajaokuta Steel Company among others.

Investors fear that if the lobbyists have their way, the Central Bank of Nigeria will be compelled to slash the minimum capital base, a situation that will pave the way for the re-emergence of ?family banks.?

The Chairman, House Committee on Capital Market, Mr. Ahmed Wadada, backed the claims by Bankole, saying that Nigerians were yet to benefit from the consolidation exercise.

?All I can say is that the banks are getting fatter and fatter, while Nigerians are getting thinner. The interest rates are still high,? Wadada said.

Calls seeking comments from the Head of Corporate Affairs of CBN, Mr. Festus Odoko, were not successful.

Last Saturday, the Governor of the Central Bank of Nigeria, Prof. Chukwuma Soludo, said the reform in the banking sector had increased credit to the private sector.

According to him, as at 2003, the communication sector got an aggregate of N293bn credit facility and as at the end of last year it was N1.15tn; Oil and Gas was about N229bn as at 2003 but by the end of last year it was N1.26tn.

?These indicators show that our banks are beginning to become major players in the sectors where hitherto they could not play any major role,? he added.

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INVESTORS HINT ON LOBBY TO REVERSE BANKING CONSOLIDATION
« on: June 27, 2008, 05:30:38 PM »

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