|
|
Another window of foreign direct investment was recorded in Nigeria weekend as Ecobank Transnational Incorporated (ETI), the parent company of Ecobank Group invested a total of N17 billion ($134 million) towards increasing the capital base of its local subsidiary – Ecobank Nigeria Plc.
With this investment, which underlines Ecobank Group’s confidence in its Nigerian operations and the future of the Nigerian banking industry, Ecobank Nigeria is now capitalised at a level well in excess of the N25 billion minimum capital requirement.
Also, the Nigeria Deposit Insurance Corporation (NDIC), weekend alerted the banking industry of the possibility of multiple failures after the first phase of consolidation which ends December 31.
Group Managing Director, ETI, Mr. Arnold Ekpe, who confirmed the injection of the funds weekend, said that with the capital injection, ETI has increased its stake in Ecobank Nigeria to 75 percent from 54 percent.
To enhance shareholder value and the liquidity of its shares, ETI, according to Ekpe, will be listed on the three exchanges in the sub-region, namely The Nigerian Stock Exchange, The Ghana Stock Exchange and the BRVM, Abidjan in the second quarter of 2006.
In addition, Ecobank Ghana and Ecobank Nigeria, the two major subsidiaries in the group, will also be listed on the stock exchanges of their respective countries in the first quarter of 2006.
The listing of Ecobank Nigeria shares on the Nigerian Stock Exchange, which will be followed by the floating of ETI shares, is in line with a preliminary merger deal between ETI, Ecobank Nigeria and Nigeria's leading and oldest retail bank - First Bank Plc to create one of Africa's biggest banks, with combined assets in excess of $5.6 billion and branches in 15 countries.
This is in line with Ecobank's current strategy to evolve into a world-class pan-African banking group and under the deal signed in November, ETI and First Bank will acquire an undisclosed stake in each other.
The fusion of the two commercial banks would produce a new bank to be known as First Ecobank, while the subsidiaries of ETI will retain their names, using First Bank elephant logo.
Justifying its investment in the country, the ETI boss maintained that “Nigeria represents the largest economy in West Africa and the investment in Ecobank Nigeria coupled with the proposed combination with First Bank positions the Ecobank Group to benefit from the future growth and development of Nigerian economy.”
Generally recognised as the leading regional banking group in West and Central Africa, Ecobank has grown over the last 17 years into a group with a balance sheet of over $2 billion and over 2500 employees and 136 offices across 13 countries.
Since inception, the Ecobank Group has invested over $300 million in the banking sector in West and Central Africa, by far the largest investment by any banking group in the region.
The Ecobank group has been a pioneer in introducing new products and initiatives in the area of regional trade and investments.
While Ecobank Nigeria pioneered the introduction of MasterCard in Nigeria, Ecobank Ghana has a been leader in the introduction of Visa cards in Ghana and the group also pioneered the introduction of a regional automated teller machines (ATM) and cards network across the countries of French West Africa.
Ecobank also plans to open four new subsidiaries in Chad, Equitorial Guinea, Sierra Leone and Guinea Bissau in 2006.
At the last count, the Central Bank of Nigeria (CBN) said foreign inflows totaling $186 million and £162,000 had been used to recapitalise some banks, including Citibank and Standard Chartered Bank, by their foreign affiliates while N359.1 billion has been raised and allotted by banks through private placements and public offerings.
Meanwhile, the Nigeria Deposit Insurance Corporation (NDIC), weekend alerted the banking industry of the likelihood of multiple failures after the first phase of consolidation which will end December 31.
Speaking to financial journalists in Abuja, Managing Director of the Corporation, Mr. Ganiyu Ogunleye said the issue of multiple bank failure remained one of the main challenges, that regulators will have to grapple with, in the post consolidation era.
He listed other challenges to include weak corporate governance, inadequate executive capacity and inadequate legal system and judicial process.
According to him, “some banks that could neither be merged nor acquired (either because of their financial condition or the observed ownership culture in the environment) run the risk of liquidation.”
He noted that, “the possibility of multiple bank failure would inevitably task the financial resources and executive capacity of the corporation.”
This, he explained, will become a burden on the corporation, because as a deposit insurer,” it is required to pay all insured deposits of failed insured institutions as soon as their licenses are revoked by the CBN.”
Ogunleye added that, “the challenge of multiple bank failure becomes an issue of concern when account is taken of impending upward review of the maximum deposit insurance coverage (MDIC), from N50,000 to N200,000, which is before the National Assembly and the clamour for downward review of the premium rate paid by insured institutions.”
While noting that, “the upward review of the MDIC has the effect of increasing the liability of the corporation when a bank fails, “ he however noted, “a downward review of the premium rate has the effect of reducing the premium collectible from insured institutions (the major source of the deposit insurance fund from where the obligation of payment of insured deposit is met).”
Ogunleye who spoke on “PostConsolidation: The Challenges Before NDIC” also stated that the corporation was concerned about the ability of management of the merged entities to identify all integration risks at an early stage and manage them effectively in the shortest possible time.
Represented by the corporation’s Director of Research, Mr. Joesph Donli, he noted that banking is all about risk management and “whatever circumstance that adversely affects the ability of any bank management to effectively manage risks facing it, would inadvertently constitute a challenge to the corporation given its primary function of deposit insurance.”
He therefore expressed the need for a change in orientation, attitudes, value system and capacity building by the operators at all level, particularly at the top management level.
Similarly, the NDIC chief executive pointed out that “with the emergence of big banks, weak or poor corporate governance would become more serious issues as the failure of large banks could cause systemic problems while posing operational difficulties to the supervisory authorities in resolving them.”
[an error occurred while processing this directive]
Top of Page - [ Discuss this story ]
Related Articles
Search Results
| |
Get NaijaPost Articles Free!!!
We'll supply you with JavaScript modules that links
your web site
directily to custom
headline news
>> Click here to begin
|
 |
Headline News
Latest Headlines
|
|
|
Email this article
