Nigeria Banking Update

Four Nigerian banks -Zenith International BankPlc, Intercontinental Bank Plc, Fidelity Bank Plc and Stanbic/IBTC Plc and two prominent Nigerian bankers – Mr. Tony Elumelu (Group Managing Director, United Bank for Africa Plc) and Otunba Subomi Balogun (Founding chairman, First City Monument Bank Plc) at the weekend in Washington were honoured with awards by The Banker.The Banker Award 2008 organised by African Business Magazine, which was supported by African Development Bank held at the Willard Intercontinental Hotel in Washington at which the African Business and banking communities were well represented.

The Governor of the Central bank of Nigeria, Prof. Chukwuma Soludo and Oby Ezekwesili were star Nigerian guests at the function.Zenith was singled out of the several banks in Africa as the Best Global Bank in Africa. Last year, the bank won the Most Socially Responsible Bank in the continent. UBA, which won last year 's Emerging Global Bank in Africa, had its Group Managing Director winning the African Banker of the Year. Intercontinental Bank on its part won the African Banker of the year award. Fidelity Bank Plc won the Most Socially Responsible bank of the year award, while Stanbic/IBTC won the Best Issuing House in Africa award.Otunba Balogun won the Life Time Achiever award in recognition of his pioneering effort in merchant banking in Nigeria.An elated Otunba Balogun who would be celebrating his 75th birthday in the next few days told the audience that the awards were his birthday gifts.Fidelity Bank won the Socially Responsible Bank of the year award.

It was not an all Nigerian affairs as other African banks were recognised and conferred with deserving award. Needbank of South Africa won the Most Gender Sensitive award while Development Bank award went to the Development Bank of Southern Africa. Standard Bank of South Africa also won Deal of the Year award, while Investment Bank of the year award went to Renaissance Capital. Micro-finance bank of the year award was won by Banque de la Habitat de Tunisia while the Most Innovative Bank award went to Ecobank Transnational, Togo. The Governor of the Bank of Ghana was honoured and recognised with the award of Africa Central Bank Governor of the year while the Finance Minister of Malawi was honoured with the award of Finance Minister of the Year.Zenith Bank Assistant General Manager, Corporate Communication Mr. Timeyin Ejoor was on hand to receive the award on behalf of his bank.

The local banks in Nigeria are presently unaffected by the negative developments in the financial markets of the United States and Europe. The reason is that the crisis is driven by failed financial products that led to the systemic distress.The President of Chartered Institute of Bankers of Nigeria and Group Chief Executive Officer, Intercontinental Bank Plc, Dr. Erastus Akingbola, said that: “As the crisis appears escalating in the world’s leading financial markets, it is natural for financial services consumers and the general public in other parts of the world to be concerned about the possible spill-over effect or impact on the local market.

He said that while the ongoing global financial crisis is a wake-up call for Nigerian banks, none of the 24 local banks is affected by the crisis. While noting that "Nigerian banks are not yet into the kind of exotic products that led to the problems of those institutions abroad.However, the industry operators must be on alert to avoid the type of investments and consumer lending that would put the system on tailspin.

Nigerian Banking industry is also taking the development in the world's financial markets as a wake-up call for refocusing the international expansion because if such crisis occurs in five years time, many Nigerian banks may be affected just like other global players, as they would have been fully integrated into the global markets and therefore should be wake up for a home-grown strategy and attention to risk management principles as business network and volumes grows.

He also said that "the financial crisis is a wake up call on banks’ top executive management, especially the Chief Executives, to have eyes for details and be fully in-charge of the key levers of the business. There is no room for absentee CEOs, but one who is in constant touch with the realities on ground in the running of their organizations.

FIRST Bank of Nigeria Plc yesterday, extended its services to France as its United Kingdom subsidiary; FBN Bank (UK) Limited opened a branch in Paris, France.

The inauguration of the Paris branch was witnessed by officials from the apex bank regulator in France,Ban du France, Nigerian Ambassador to France,ambassadors of other Francophone West African countries and directors of First Bank of Nigeria Plc.In his speech,the Group Chairman of First Bank,Alhaji Umaru Abdul Mutallab,said the launch of the Paris Branch was another unique opportunity for the Bank to provide excellent banking and financial services for the global community, especially the West African_French business community.

He said "As the relationship between the governments and citizens of Nigeria and France become increasingly strengthened, it is only logical that well-meaning institutions, like First Bank Group, be in the vanguard of providing the vital machinery for fostering the growing relationship," Mutallab said. He explained that the Bank's foray into France is indeed very strategic, in view of its relationship with other Francophone countries in the West African sub-region.

"It is for this reason that our Bank, the first Nigerian financial institution to take such initiative, is grateful for the support of the French Government, especially the French Monetary Authorities for the opportunity to establish in Paris," he said.

Mutallab added that First Bank's strategy of internationalization started in 1982 when the Bank established its London Branch which enabled it to gain a foothold in one of the world's leading financial centres.

"In keeping with our determination to play a greater role in international trade flows from Nigeria to the rest of the world and vice versa, our London branch transited into FBN Bank (UK) Limited, Nigeria's first full fledge subsidiary in the UK, which commenced operations effectively November 01, 2002 and as you can witness, has been performing creditably well," he said.

The Group Managing Director/Chief Executive, First Bank Nigeria Plc, Mr. Jacobs Moyo Ajekigbe said the Paris Branch will be a window for African corporate organizations in France. He said the attraction of the new branch is the ability to bank the Francophone countries in West Africa.

"The message is that we promise our customers the best of services anywhere in the world, for our shareholders, we promise the best of returns in form of good dividends on their investments and to the government, we promise to remain good corporate citizens," Ajekigbe said.

The Chairman of FBN Bank (UK), Mr. Oba Otudeko, said that the branch would serve as a platform for international trade between African countries and France. "Our intention is to provide a platform that will link Africa trade with Paris and other parts of Europe. We are going to do very well because we have set out very well.

Our promise is to give excellent services as we have done in UK," he said.

Giving more insight into the what to expect from the Paris branch, the Managing Director, FBN Bank UK, Mr. Peter Hinson, said the Bank has been the leading Nigerian bank in the UK and would extend the same quality of services to France. "We have grown to be a leading Nigerian bank in the United Kingdom. We needed to expand and we worked closely with the Bank Du France to open in Paris. We will serve the financial needs of Sub_Sahara Africa," Hinson said.

The Executive Director, Business Development, FBN Bank (UK) Limited, Mrs. Christi Fashogbon, explained that the Bank has operated as a full fledge subsidiary in the United Kingdom for over five years and decided to solidify its relationship with both Anglophone and Francophone economies, hence the establishment of the new branch. She said the Bank has good knowledge of both UK and African which would be translated into good services to customers.

A highly elated Nigerian Ambassador to France, Mr. Gordon Bristol, said he was delighted to have one of the leading banks, First Bank to open an office in Paris. "We are going to do everything within our powers to ensure that FBN Paris succeed here.

Mobile Banking refers to provision of banking and financial services with the help of mobile telecommunication devices.The scope of offered services may include facilities to conduct bank and stock market transactions, to administer accounts and to access customized information.

M-Banking in Nigeria or in some instances SMS Banking etc. is term used for performing balance checks, account transactions, payments and others transaction services via a mobile devices. Some mobile Banking applications in Nigeria use preprogrammed configurations settings.Mobile Banking in Nigeria started from the transaction based activities whereby Bank customers are Notified via sms when transactions are conducted on their account or via Atm.This is a one way event and only for informational purposes only.GT Bank was on of the earliest Banks to provision this service to customers.That was the early days on Mobile Banking in Nigeria.

Nigerian Banks are now deploying full fledge banking via the Mobile Phones with array of services which were only possible in the Banking Halls before. Zenith Bank, UBA , GTBank, Diamond and Intercontinental Banks are the fore runners of this innovation.Despite the watch and see attitude that some very leading Banks are taking about Mobile Banking in Nigeria, mobile remains the only and most available feasible means to provide mass market alternative to Branch Banking in Nigeria. The internet has only a penetration rate of 6 percent in a population of 140 million but mobile technology is close to 50 percent penetration with prospects for growth.Mobile devices are the most promising way to reach the masses and to create a tie-in among current customers, due to their ability to provide services anytime, anywhere, high rate of penetration and potential to grow.

Deployment of 3G in coming months will also enable Banks to offer more robust Mobile Banking technologies.Key challenges in developing a sophisticated mobile banking application are Interoperability.The single reason for is the manner in which mobile phone applications evolved over time, device manufacturers focused on particular standard and and this led to a proliferation of applications .The Financial Regulator CBN should look in this issue at this early stage so that Mobile Banking ecosystem can be robust with National standard that cuts across all Banks. Bank specific Mobile Banking platforms is akin to having each bank deploying its own ATM Technology which other bank customers cannot access.

Interoperability can also help to evolve a standard that will enable low end phones which are currently excluded, to do Mobile Banking. Some countries like India and South Africa are already using some standards like R-World and USSD.Application distribution for Mobile Banking is another area where some Banks are facing Challenges. While some forward looking Banks are overhauling their gateways and reducing their reliance on Mobile Operators settings to enable customer’s phones, Some Banks are actually asking that Customers come with regular Operator settings which in many instances might not be correct configurations settings..Operator settings are not really meant for critical operations since most of the settings are used for entertainment based activities. Nigerian Banks that are looking at competing at this sector must look beyond operators settings which might not be correct, delayed in arrival,may not come at all and not regularly updated. Some Mobile operators do update like every three months while some do not at all.

For wap and Gprs based Mobile Banking applications, mobile network coverage will also be an issue.As part of their marketing strategies, one will expect that by now, customers do not need to visit local Branches to download Banking applications. Over-the-Air (OTA) Settings should be readily available online and some innovations can even come to play by Banks deploying Bluetooth application machines in Shopping malls and some strategic places where customers can visit and download Mobile Banking applications for free or for a fee..This will increase the addressable market of the Banks offering Mobile Banking exponentially in Nigeria.

by Emmanuel Okoegwaleemmanuel

THE Central Bank of Nigeria (CBN) restated its stance on preventing foreign banks from acquiring Nigeria's largest banks or allowing them to own more than 10 per cent equity in such choice banks.It however said,foreign banks with investment interests in Nigeria were free to apply for a licence to establish banks provided they were prepared to operate within the stipulated banking regulations.

The apex bank said the clarification had become necessary with recent commentaries in the media in respect of insinuations recently by the Mayor of London, Mr. Alderman Lewis, during his visit to Nigeria last month that the Nigerian government was not opening up its banks for foreign competition. But the CBN Head of Corporate Affairs, Mr. Festus Odoko, who issued a statement yesterday, faulted the London Mayor's submission.

According to the CBN, the policy introduced last year by the apex bank was in part to protect the Nigerian economy from being hijacked by foreigners and secondly to encourage the establishment of foreign banks in the country.

The position of the CBN has been that foreign banks and/or investors are allowed to establish banking business in Nigeria, provided they meet the current minimum capital requirement of N25 billion and other applicable regulatory requirements for banking licences as prescribed by the CBN.Such foreign individuals or institutional investors could also invest in existing Nigerian banks. There is, however, a condition that no single foreign individual/institutional investor should acquire more than the share of the single largest Nigerian individual/institutional investor in any bank, provided the aggregate shareholding of the foreign investors do not exceed 10 per cent of the total capital of the bank.

Also, foreign banks could acquire or merge with a local bank existing in Nigeria.Such a foreign bank, however, according to the CBN policy, must have operated in Nigeria for at least five years and established branches in at least two-thirds of states of Nigeria (excluding the state capital), provided the foreign bank/investors' shareholding arising from the merger/acquisition should not exceed 40 per cent of the total capital of the resultant entity.

The policy also states that the existing shareholding structure of Nigerian banks in which there are foreign interests in excess of 10 per cent might subsist but such foreign interest should not exceed the current level. The CBN concluded that she is acting in the interest of all stakeholders, particularly in view of the critical link between ownership and control of commercial banks and economic development.

Recent experience shows that foreign banks have been reluctant to expand branches across the country and operate only in few metropolitan cities. Again, the structure of their loan portfolio indicates concentration in favour of multinationals.