Oluwaghenga Odeyemi - First Bank, Nigeria

Report
Nigerian Banking Scene
Presented by:
Gbenga Odeyemi,
Chief Rep. Officer of First Bank of Nigeria Limited, Sandton
www.firstbanknigeria.com
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Contents
A.
B.
C.
D.
E.
F.
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BANKING SYSTEM IN NIGERIA
• The Nigerian goal is to become one of the 20 largest
economies by the year 2020.
• To achieve this economic goal, the country must have a
reliable and functioning financial system.
• In 2004, there were 89 banks in Nigeria. Most of them
were not adequately capitalized.
• Central Bank of Nigeria decided in 2004 to raise the capital
base of banks from N2 billion to N25 billion.
• This resulted into mergers and acquisitions within the
industry.
• The number of banks reduced from 89 to 24.
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EFFECT OF GLOBAL ECONOMIC CRISIS
• In 2007 – 2009 there was global economic crisis (resulted
to global recession). This crisis led to the collapse of many
renowned financial institutions.
• Divergent views about the impact of the global recession
on the Nigeria economy.
• It became obvious that Nigeria was not insulated against
the global crisis.
• The Nigerian stock market collapsed by about 70% in 2008
– 2009.
• Many Nigerian banks sustained huge losses as they were
highly exposed to the capital market and oil and gas
downstream.
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OTHER REASONS WHY THE NIGERIAN BANKS FAILED
IN THE PAST.
• Weakness in banks corporate governance
• Poor Risk Management/Inadequate Loan policies/ Concentration Risk/
Increase in Non- performing loans
• Weak Board and Management Oversight
• Inaccurate financial reporting
• Non performing Insider- related credits / Unsecured.
• Inadequate capital /Negative
borrowing from CBN.
Capital
and
Reserve/
Continuous
• Insider abuse
• Large Volume of Volatile deposits
• Mismatch of funds
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THE NEED FOR FURTHER REFORMS BY CENTRAL
BANK OF NIGERIA
• The 2005 banking sector reform swept away 13 banks
and the number was reduced from 89 to 25 as at 2006.
• In 2009, 8 out of the 24 banks were declared insolvent due
to huge non – performing loans of about N2.2 trillion
($14.67billion).
• It became clear that consolidating the sector in 2006 was
not enough.
• Proper regulatory and comprehensive supervisory
framework had to be entrenched to avoid economic
collapse and also restore trust and confidence in the
Nigerian banking industry.
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REFORMS BY CENTRAL BANK OF NIGERIA
• Ten banks were intervened and eight had their
management replaced.
• The CBN provided liquidity and capital support of ₦620
billion (US$4.1 billion) in the form of unsecured,
unsubordinated debt.
• A guarantee of interbank and foreign credit lines of banks
was introduced, and extended for six- monthly periods until
end–2011.
• The CBN publicly committed to protect all depositors and
foreign creditors against loss.
• The authorities established the AMCON (Asset
Management Company of Nigeria) to support the troubled
bank resolutions and the banking industry.
• The universal banking model was abolished in favor of a
“back-to-basics” model, and a new bank license regime was
introduced.
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REFORMS BY CENTRAL BANK OF NIGERIA cont.
• A number of regulatory guidelines were issued, including
capital adequacy, related parties and large exposures, risk
and risk management, and internal control and auditing.
• Prosecution of Directors.
• Tenure of Directors of banks.
• The CBN issued a Corporate Governance Code to the
banks.
• The CBN issued a directive on accounting and disclosure
practices.
• A new supervisory framework was adopted combining risk
based and consolidated supervision.
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REFORMS BY CENTRAL BANK OF NIGERIA cont.
• The placing of resident examiners in banks was
instituted.
• The CBN signed Memoranda of Understanding (MOU)
with foreign supervisors geared toward receiving
information on the financial condition, and adequacy
of risk management and controls, of the various
entities of the banking groups that have foreign
operations.
• Cooperation and coordination between the two
agencies involved in banking supervision, the CBN
and the Nigeria Deposit Insurance Corporation
(NDIC), were strengthened.
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BANKS IN NIGERIA
NO
1
2
3
4
OPERATING BANKS
Access Bank
Ecobank
First City Monument Bank
Sterling Bank
OPERATING BANKS THAT CHANGED NAMES
5 Enterprise Bank Limited
6 Keystone Bank Limited
7 Mainstreet Bank Limited
NO
OTHER BANKS
8 Citibank
9 Diamond Bank
10 Fidelity Bank Nigeria
11 First Bank of Nigeria
BANK ACQUIRED
Intercontinental Bank
Oceanic Bank
FinBank
Equitorial Bank
FORMER NAME
SPRING BANK
Bank PHB
AFRIBANK
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BANKS IN NIGERIA cont.
NO
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13
14
15
16
17
18
19
20
21
22
23
24
BANKS
Guaranty Trust Bank
Rand Merchant Bank - Merchant bank
Skye Bank
Stanbic IBTC Bank Nigeria Limited
Standard Chartered Bank
Union Bank of Nigeria
United Bank for Africa
Unity Bank Plc.
Wema Bank
Zenith Bank
FSDH Merchant Bank - Merchant Bank (NEW)
Heritage Bank Plc.
Jaiz Bank
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THE IMPACT OF REGULATIONS
• Bank supervision has improved significantly since the
financial crisis.
• Confidence in the sector has been restored.
• The reform of the sector is a continuous process.
• Various Stress tests suggest that most Nigerian banks
could withstand extreme shocks.
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Some Highlights in the banking
sector for QTR 3 2014
LOANS AND
ADVANCES
N8 TRILLION
TOTAL
ASSETS
N25
TRILLION
NON
PERFOMING
LOAN < 5%
TOTAL
DEPOSIT OF
N17
TRILLION
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Banking Industry: Key Themes
New Central Bank of Nigeria
Governor took over Mr. Godwin Emefiele
Nigeria became the 26th largest
economy in the world
CBN implemented min.
CAR of 15% under Basel
II for all banks - October 1
QTR
1
QTR
2
QTR
3
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REASONS WHY YOU SHOULD INVEST IN NIGERIA
• Abundant Resources: Nigeria has enormous resources,
most of which are yet to be fully exploited. They include
mineral, agricultural and human resources.
• Large Market: With a population of about 170 million
people.
Over 65% of 170 million Nigerian population is youthful –
under 35 years.
A booming Middle Class represents nearly 25% of the
country’s population.
• Free Market Economy
• Robust Private Sector
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REASONS WHY YOU SHOULD INVEST IN NIGERIA Cont.
• Free Flow of Investment: Exchange control regulations
have been liberalized to ensure free flow of international
finance. There is now unrestricted movement of investment
capital.
• Attractive Incentives: A comprehensive package of
incentives has been put in place to attract investment.
• Fast Growing and Reliable Financial Sector
• Skilled and Low Cost Labour: There is an abundance of
skilled labour at an economic cost.
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OPPORTUNITIES IN NIGERIAN ECONOMY
MANUFACTURING
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THANK
YOU
FOR
LISTENING
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