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Nigeria: Local Investors wanted for sick banks

Local investors will not be excluded from the purchase of sick banks that will soon be put up for sale by the Central Bank of Nigeria (CBN), says Minister of Finance, Mr Olusegun Aganga in Abuja

According to the minister,  local investors are not excluded from the sale of Nigeria’s salvaged banks, stressing that both local and foreign investors were welcome to buy the banks being restructured by the CBN.

Aganga said that the current debate in some quarters about the propriety of selling the restructured banks to foreigners was misinformed.

The minister said that, following several enquiries, he had received on the subject, he found it necessary to make a public statement and clarify the issue.

“Local investors can buy them; foreign investors can buy them; consortium of both local and foreign investors can buy them too.  And as far as I am aware, this has also been the position of the CBN governor,” he said.

The important thing, he stressed, was that the banks must be sold to corporate bodies that had demonstrable capacity and expertise to run them. “In fact, there is no reason why credible existing shareholders, who have the required technical competence or partner, as well as capital, cannot invest in the banks,” he added.

“We are interested in building a robust, healthy and strong financial sector capable of meeting both its economic intermediation and social functions to Nigeria. Whoever shows us the expertise and capacity to deliver on these, whether local or foreign, or a combination of both, is welcome to buy the banks.

Our target is to get our banks to be among the strongest in Africa and the world,” the minister said.

He stressed that while the alleged recklessness and indiscretion of some Nigerians brought the banking sector to the present low position, some other Nigerians had shown capacity in delivering quality banking services, building credible local brands along the line. The ones that had done well were welcome to bid for the purchase of the restructured banks, he said.

“I always like to spend more time talking and reminding people that we have at least 14 very strong banks that were established and being managed by very competent Nigerians. So the emphasis on foreign ownership is misplaced. It is about quality of technical competence, capital and credibility,” he said.

On the alleged recent downgrade of the rating of Nigerian banks by Standard & Poor’s, (S & P) the minister said that the last rating of Nigerian banking industry by this agency, was towards the end of 2009 and wondered where this report emanated from.

Indeed, the latest rating of any Nigerian bank by the agency were those of Guaranty Trust Bank (GTBank) and Zenith Bank, both of which were upgraded from negative to stable on July 1.

Commenting on the state of Nigerian banks generally, a competent source at Credit Suisse said:

“While the developments last year had a negative impact on the access of Nigerian banks to the international capital markets, we believe the measures taken by the government and the Central Bank will be positive in the medium to long-term. Indeed, we believe the ‘good banks’ (First Bank, Zenith Bank, GTBank, etc.) currently have access to the international capital markets. Furthermore, we believe once the supported banks (Intercontinental, Union Bank, etc.) have been recapitalised and restructured, they will also be able to tap the markets again.

“While international capital markets have been volatile over the last few weeks, the secondary trading levels for the two outstanding bank bonds in Nigeria (GTBank’s senior offering and First Bank’s Lower Tier 2 transaction) are quite strong, albeit with very low liquidity,” the source added.