Nigeria Banking Update

President Umaru Musa Yar’Adua has directed relevant government agencies to take immediate steps to work out a palliative package to cushion the impact of the global economic crunch on Nigerians – but this will not include a salary increase.

Meanwhile, the Governor of the Central Bank of Nigeria (CBN), Prof. Chukwuma Soludo, has described as “unfortunate misrepresentations” statements attributed to him that he declared Nigeria as “insulated” and “immune” to the global economic crisis.Speaking with State House Correspondents yesterday, the Special Adviser to the President on Media and Publicity, Mr. Olusegun Adeniyi, disclosed that the palliative directive came after the President was properly briefed following Tuesday’s meeting of the Presidential Steering Commit-tee on the Global Economic Meltdown during which a number of palliative measures were proposed on the short, medium and long terms to mitigate the effects of the global economic crisis on the country.

He disclosed that Governor Adams Oshiomhole of Edo State, at the end of the meeting which was chaired by the Finance Minister, Dr. Mansur Muhtar, was mandated to lead some members of the committee to brief the president on the decisions reached. The presidential spokesman further disclosed that Yar’Adua, after the briefing, immediately directed the CBN and Finance Ministry to liaise with other agencies and do more work on some short-term palliative measures being proposed so that they could be implemented soon.

Shedding more light on the incentive package, he said while salary increment was not on the card given the current falling crude oil price in the international market, the proposed incentives would put smiles on the faces of Nigerians soon and raise the purchasing power of the masses. “What is being worked out is a package of incentives that will ginger production, increase the purchasing power of the ordinary man on the street and help generate employment opportunities.

“In the medium- and long-term strategies, aside infrastructural development, the government is looking in the direction of agriculture through commercial farming clusters and value chain not only for food security but for employment generation. In the oil sector, the local content guidelines are being reviewed as a component of the reforms to give more leverage to our people,” he stated.The presidential spokesman said Muhtar and Soludo would likely get back to the president before this weekend and that measures being worked out would be announced as soon as their details were sorted out.

On the 2009 budget expected to be approved by the National Assembly this week, he said the president had already received the report of the committee he set up to work out the modalities for its implementation, pointing out that with the measures being put in place, a lot would be achieved this year. “In the power sector, the Minister, Dr. Lanre Babalola, is likely to be given a special dispensation by the president with regards to power of spending so that he can complete many of the projects and I think the details are currently being worked out by the Director General of Bureau of Public Procurement, Mr. Emeka Ezeh. “While the economic outlook does not look promising given the price of oil, the president remains optimistic that Nigeria can seize the moment to redirect our economy and begin on the road to prosperity,” he said.

Reviewing the current global economic crisis further, Adeniyi said those criticising the return of huge sums of money meant for the execution of the 2008 budget to the treasury could now see the wisdom of spending only when sure of achieving set targets, comparing it with the past when he said unspent allocations were not returned, yet targets were hardly met. All members, including Governors Babatunde Fashola, Oshiomhole, Bukola Saraki and Isa Yuguda of Lagos, Edo, Kwara and Bauchi states respectively as well as private sector members such as Bismack Rewane, Tony Elumelu and Aliko Dangote were all present at the meeting which proposed some palliative measures on the short, medium and long-term basis.

In a press statement signed by Special Assistant, Media and Public Relations to the CBN governor, Mr. Isaac Okoroafor, media commentators and analysts were said to have misrepresented Soludo’s views.The statement read: “Our attention has been drawn to the unfortunate misrepresentations of the Governor of the Central Bank of Nigeria, Professor Chukwuma C. Soludo’s views on the impacts of the global financial crisis on the Nigerian economy, by some media commentators and analysts.

To put the record straight and for the avoidance of doubt, we have carefully reviewed copies of all his presentations as well as the full transcripts of his public pronouncements on the matter, and can confirm that at no time has Professor Soludo said that the Nigerian economy is ‘IMMUNE’ or ‘INSULATED’ from the global crisis.“We have posted on the CBN Website, full transcripts of Prof. Soludo’s TWO presentations to the Senate on October 21, and December 16, 2008; Interactive session with the Media on the Financial Crisis held in Lagos on October 31, 2008; and Powerpoint presentation to the House of Representatives on January 21, 2009. See also ThisDay Newspaper of November 10, 2008 on the full transcript of Prof. Soludo’s analysis of the cause of Nigeria’s capital market crisis (presented at the ThisDay Town Hall meeting on October 3, 2008) which he attributed primarily to the global crisis.

In these presentations, Prof. Soludo has clearly shown how the global crisis affects the Nigerian economy through the impacts on the capital market and by extension the banks through their exposure to the capital market; collapsing oil price and implications for external reserves, fiscal revenue, and exchange rate; the decline in capital inflows and trade/credit lines to the banks; etc. Specifically, during the presentation to the Senate (which was broadcast live), he elaborated on the possible second round effects on the economy.“Indeed, the CBN’s Monetary Policy Committee (MPC) had, in its meeting of September 18, 2008, taken far reaching measures to proactively inject liquidity in the banking system as part of its strategy to minimize the effects of the global credit crunch on our banks.

Prof. Soludo has also often warned of the likely inflationary impacts of the liquidity injection, and also put forward concrete proposals on how Nigeria can effectively weather through the global crisis including the key legislations which the National Assembly needs to pass urgently.“Prof. Soludo has been consistent in assuring Nigerians about the health of our banks and the safety of our foreign reserves.

At the beginning of the crisis, Professor Soludo had been invited to several fora to answer mostly two questions. First, Are Nigerian banks safe or do they require any bailout? Second, Are Nigeria’s foreign reserves safe? To the first question, Professor Soludo has been consistent in stating that because Nigeria moved ahead of the world to recapitalize and consolidate its banking system, Nigerian banks are robust and strong enough to take losses and that they are protected from the full effects of the global financial system. He has consistently assured that the CBN would take all necessary measures to ensure that Nigerian banks do not fail like their counterparts in some countries. To the second question, he has also consistently reassured that our foreign reserves are safe.“Furthermore, Prof. Soludo has consistently pointed out that some of the ‘shock absorbers’ that could enable Nigeria minimize the full weight of the global crisis include: recapitalized and consolidated banks which continue to post profits and provide credit to the economy at unprecedented rate; higher external reserves than at previous times; lower debt-to-GDP ratio which provides room for greater fiscal expansion; agriculture as the dominant sector of the economy and hence the likelihood that Nigeria could avoid experiencing a recession; exchange rate flexibility to ensure external balance; the ‘excess crude savings’ which could provide some cushion; the liberalized economy and stronger private sector as well as the Government’s economic management.

All these lead Prof. Soludo to conclude that Nigeria’s GDP, which is led by the non-oil sector, would continue to grow positively, despite the crisis. However, he is under no illusion about the magnitude of challenges that lie ahead, and how all stakeholders must work harder, together to ensure that Nigeria minimizes the consequences of the crisis and takes full advantage of the opportunities offered by it.“So far, Prof. Soludo has not been proved wrong. The latest estimates from the National Bureau of Statistics (NBS) indicate that Nigeria’s GDP grew by 6.8% in 2008 compared to 6.2% in 2007 despite the crisis, and this was led by the non-oil GDP at 9.5%.

Indeed, there is a consensus global expert opinion that developing countries (especially Africa) would continue to grow positively in spite of the crisis (See ThisDay Newspaper January 30, 2009; and latest version of the IMF’s World Econo-mic Outlook). Furthermore, no Nigerian bank has failed, and our external reserves remain safe.“We have taken pains to clarify these issues because at a time like this (unprecedented in human history), there is absolute need for clarity and effective communication. The Nigerian economy cannot afford any miscommunication regarding the crisis at this time. Both my office and that of Head, Corporate Affairs, Central Bank of Nigeria, remain open to clarify any issues pertaining to the CBN’s pronouncements on these matters.”

Source:This day Newspaper

Some years ago the perception of online banking seemed like a suspicious one and concerns about security and computer glitches were enough to put most people off. But despite these challenges, online banking has become a very useful tool in today’s fast world.
In Nigeria today most of the private and public sector banks are offering this free service to it’s customers in addition to Automated Teller Automated (ATM) and other latest banking services. But you have to be very careful when using this service because online is very vast and nobody can guarantee you 100 per cent security in online based transactions. In the knowledge economy that we live in, almost all transactions are web enabled. But with the continuing success of flagship companies like Access Bank Plc, Oceanic Bank Plc, Zenith Bank Plc etc, more and more of us are choosing to do business over the online. Sophisticated technology means that your information is well protected, and an online banking account offers several advantages over traditional banking anywhere, anytime.

The ease of being able to log on and carry out transactions at any hour of the day or night could be a welcome substitute to visiting the bank on your lunch hour. No queues and no bank holidays mean the customer has even more control over their finances. Plus, your account information is displayed as a clear overview no more riffling through mountains of old bank statements to find the information you are looking for. Because online banks do not have the overheads of running branches, they can pass on the savings to the customer, and offer better rates of interest on your money. Not only do they offer considerably more interest on your current account. Some people believe online banking to be even more secure than traditional methods because you will not have pieces of paper with insightful information lying around, and there is no hazard of your business being overheard by other bank customers. One needs to check if the site is secure whenever conducting transactions online. Never send passwords or account information in emails, and be sure to log out when you are finished your session.

When we talk about safety of online banking we should also look at the downside of it. In the past there have been a few cases of computer glitches revealing customers’ personal information, but these have been relatively minor and as online banking becomes more popular, systems are likely to become more secure than ever before. You do need to make sure your computer’s security system is very good, and that you have privacy for your online banking. Some people may miss the face-to-face contact of their local branch, and most will choose a combination of online banking, phone banking and branch visits. As online banking becomes more established, it’s likely most of us will end up conducting at least a proportion of our transactions online, and you could find switching on to the new banks well worthwhile.

I will also be talking about the pros and cons of the safety of online banking, which is a cost effective way of delivering financial services over the online through the bank's secure site. Online banking, which also refer to as online banking, Home banking or electronic banking, which is basically effective banking, which exists on the online. Even from the point of view of an individual, online banking makes a whole lot of sense to them.

Advantages
First and foremost, there is no need to take the time off and drive to the bank where he/she branch and wait in long, never-ending queues to be attended to. You can do all of your banking transactions online, with convenience greater speed, efficiency, additional services, effective, and accessibility. What I meant by convenience, is banks that are online never close, they are open 24/7 and only a click away. It allows one to transact at ones convenience, from the boundaries of your home or office. Speed in the sense that you process and execute transactions quicker than traditional banks. Also, in the aspect where you can use online banking to be served instantly without having to compete with people before you. While efficiency is very important in online banking you can access all your accounts from one secure site whereby there are electronic records of all your transactions and the chances of errors due to human intervention is minimal.

You no longer need to visit each individual post office. You can do it online with Online banking, without having to fill out and mail checks. Additional services - Free bill payment, rebates on ATM surcharges, credit cards with low rates, free online checking and easy online applications for personal loans and mortgages to name a few. In the aspects of effecting this offer various tools help you to manage your assets more effectively. Also, in accessibility you can access your account from any location and at anytime wherever you are. For most people the biggest stumbling block to online banking is learning to trust it and to be sure whether it is protected. The main concern of the safety of online banking is security, protection of customer's privacy and protection against fraud. However a lot of people are choosing online banking as their number one technique of banking as they appreciate the convenience. The cons aspect of the safety of online banking is that banks website changes whenever they are upgrading their online programmes adding new features in unfamiliar places. In some cases, you may have to re-enter account information. Start up takes time to open, in order to register for your bank’s online programme, you will probably have to provide your ID and sign a form at the bank branch. If you and your spouse wish to view and manage your assets together online, one of you may have to sign a durable power of attorney before the bank will display all of your holdings together. Also, in online banking the learning curve is difficult this because the banks website can be difficult to navigate at first. What you need to do is plan to spend some time or read the tutorials in order to become comfortable in your fundamental lobby. The trust thing for many people, the biggest hurdle to online banking is learning to trust it. At this point customer tends to question themselves whether or not did their transactions went through when processing it? Did they pus the transfer button once or twice? The best bet is for the customers to print out the transaction receipt and keep it with your bank records until it shows up on your personal website or your bank statement.

Online banking is becoming increasingly trendy as it is an easy way of providing banking services. There are many advantages and disadvantages of the safety of online banking. One of the best things about technology or the most awful, this depends on our point of view, is the ease with which traditional banking transactions can be conducted. online banking, which emerged on the scene as a new and deceitful banking option has quickly become the most accepted way of banking online here in Nigeria. In fact, it would not be an overstatement to say that most Americans today use online banking instead of traditional banking. Even some of the bigger banks, do not offer traditional banking services anymore, or require charges to those who continue to bank the traditional way.

The Flip Side
We should always have this at the back of our mind that online banking has its own flip side too. There will be security concerns about online banking. Of course most banks have ensured that their online banking services are offered on secure, encrypted sites. But what about in the aspect where scammers always ensure that they come up with more and more ground-breaking ways in which they can try to break into your online banking. Hacker is just one such challenge, where criminal try to steal your online banking username and password, and then log in to your account to make withdrawals. But then again, the error in this case too is that of the trusting human nature, rather than the Online Banking technology. In any case, all banks that offer online banking provide guidelines on online banking safety and common scams that you should steer clear of. Many of the larger banks now have online banking. For instance, Oceanic Bank has it online banking, GTB online banking, and Bank PHB online banking to name a few. Every bank now has some variety of website where you can do your banking transactions. When you think about the positive aspects against the negative aspects of the safety online banking, you will find out that it saves time, money and removes most of the pain points which is related to traditional or conventional banking. And nowadays, Online banking is no longer a luxury. It is a necessary way to transact and do your transactions.

Clearly, the choice of whether or not to bank online depends on many variables. Even if a person can see the benefits, they may be unwilling if they do not trust or have much experience with the online.

On the other hand, people may only sign up for limited services like account viewing. This will save them from safety concerns but will still give them daily access to account activity. If you decide that online banking is right for you, be sure to review the offers of several banks. Each has different fees and benefits that can make a big difference in how much online banking costs you. By comparing deals and educating yourself, you will find an online banking service that suits your needs.

By Bisi Ikuomola,11.12.2008,Thisdayonline

Following cases of unprofessional practices by some Nigerian bankers,the Chattered Institute of Bankers of Nigeria (CIBN),has started compiling list of all bankers in Nigeria to punish erring ones.

The President of the Institute Dr. Erastus Akingbola, said this in Lagos, during a cocktail party organized for media executives.“We want to self regulate and discipline ourselves.We are compiling the names of all bankers in Nigeria so that we can discipline erring bankers.During my tenure,we will continue with the reforms and my ambition is to return the banking profession to the pride of place because we will be strict on integrity”,he said

He said where a bank errs,such a bank should write an apology to the customer and where money is involved a refund should be made with interest.He also revealed that CIBN intend to start a live TV programme tagged ‘the banker and you’ so that Nigerians would have opportunity of voicing their views on their banking experiences.He said it will also be a platform where the CEOs will also react to queries directly from the banking public.

On arbitrary charges by some banks he said,while the CIBN cannot dictate to each bank how it should operate,it is a competitive market place so the customers have a choice of changing banks if they feel their banks is unfair to them.

On the capital market,he reiterated that the market is at its ebb and would be rising anytime soon.He also assured that, Nigerian banks are healthy enough because banks’ investment in the capital market is not more than 10 percent of their total investible funds, about N60 billion of all the banks’ capitalization.

All the 24 banks in Nigeria are strong and therefore do not need any bailout, the Central Bank of Nigeria (CBN) Governor, Prof. Chukwuma Soludo has said. Soludo gave this assurance at the formal opening ceremony of Access Bank office in the United Kingdom. His assurance stemmed from the on-going global financial meltdown, which is spreading like bush fire and has seen several financial institutions like AIG, Lehman Brothers, Merrill Lynch in need of rescue packages, of which the United States of America and United Kingdom governments have coughed out a $950 billion and 500 billion pounds bailout plans respectively.He noted that the European countries are committing over £2.5 trillion to bail out some of their financial institutions, while the global economy is injecting £4 trillion because of “the mistakes made by some people.”The CBN Governor said that even if the need arises for a bail out of the local banks, the apex bank already has a contingency plan and stands ready to support any bank.

All the 24 banks in Nigeria are strong. Our banks (local banks) are making huge profits, declaring bonuses and dividends. Whatever it will take to support our banks, the CBN stands ready. No bank will go under the watch of the CBN. Our banks remain resilient,” he assured. Soludo said that with the rate at which the Nigerian banks are growing, they would soon overtake other bigger banks in Africa within the next few years. He said contrary to insinuations that the banks are not giving out credits to the private sector, the former’s credit to the latter as at last August was some 70.5 per cent on an annualised basis, which had already overshot the estimate for this year. This he said, means that if banks do not give any more credit to the private sector for the remaining two months, the level of credit they have so far given is enough for the economy.

Few days ago at the just concluded World Bank/International Monetary Fund meetings in Washington DC, Soludo had hinted that 11 countries were consulting Nigeria on how to manage the effects of the on-going global financial crisis in their respective countries. He did not however, unveil the names of the countries that have approached Nigeria for such assistance. Soludo, who spoke on behalf of the Nigerian delegation to the meetings, said the 11 countries approached Nigeria with a view to learning how the country was able to take a pre-emptive step to prevent a spill-over of the global financial crises with the banking consolidation exercise. The regulatory induced recapitalisation programme, which raised the shareholders’ funds of banks in Nigeria from N2billion to N25 billion in 2005, reduced the number of banks from 89 to 24. “What the world is doing today is what we ( Nigeria ) did four years ago – the developed countries are now capitalising banks and rescuing banks just like we (the Federal Government) did for Bank of the North. We ( Nigeria ) took a pre-emptive measure. We did not wait for banks to fail before we started recapitalising them. “Before consolidation, the non-performing loans of banks in Nigeria were about 23 per cent, which was close to the trigger point. If we had not done consolidation, many of the banks in the country would have been bankrupt,” he said.

The only way offshore banking would be effective in the country is for banks to have consolidated accounting and reporting system.The Deputy Governor Central Bank of Nigeria, (CBN), Mr Ernest Ebi made this remark in Lagos at a two -day retreat and that the major challenges of offshore subsidiaries of the nation's banks was the minimum standard for the supervision of international banking groups and their cross border establishments.

He added that,apart from having a consolidated accounting and reporting system;there is need to establish Financial Action Task Force (FATF) to help protect the financial system from criminal use for the laundering of the proceeds of drug related and other serious crimes.He however, pointed out that 10 out of 24 banks operating in the country have about 46 branches outside the shores of the nation's banking system.

He stated that offshore banking offered a lot of legal and financial benefits to the depositors and the banks.Some of the benefits according to him, include favourable regulatory and tax environment; expansion of services; infrastructure support; greater returns on investment; security and privacy of investment among others.

He further pointed out that the financial system strategy (FSS) 2020 was designed to make Nigeria Africa's financial hub, adding that the financial regulators are determined to implement a series of initiatives to improve the regulatory framework and infrastructure.He said that with FSS 2020 new areas of services would be identified and developed, stressing that this would in turn attract more banks to locate in Nigeria as well as help existing ones to expand their operations.