Mr Charles Chukwuma Soludo PhD, chair of the Central Bank of Nigeria (CBN) and his pet project to recapitalise Nigerian Banks and carry out a comprehensive reform of the Nigerian Banking sector may not have given birth only to what he thought. It is believed that, the banking reform piloted by Mr Soludo has delivered almost all what he and his team had planned: slimmer, stronger but above all, reliable Banks (1). Furthermore, the Banking reforms dredged Nigeria up, as the real financial leader in the sub region and a serious challenger to South Africa. But Mr Soludo and his team perhaps never thought that, as they oversaw the sanitizing and fattening of the capital bases of the 25 surviving Nigerian Banks, they indirectly excited the appetite of much bigger and well established International Banks.

Aware of the predatory appetites of bigger international banks, that have been keeping a hawk eye on development in Nigeria’s financial sector recently, the Nigerian Central Bank, forced certainly by some Nigerian Bank owners, have been gesticulating and also finding antidotes to prevent foreign take over bids. One fast lane suggested to shield Nigerian Banks from foreign take over has been the dangling of a Nigerian brand of Economic patriotism, a stratagem used in France recently to prevent the American food giant Pepsi Co from taking over French Milk giant Danone. But France is not the only country employing economic patriotism, the US and currently Germany, is now in love with the concept given popularity by former hyperactive French Prime Minister Dominique De Villepin. Economic patriotism or protectionism is not a good option, for it avoids national companies from exposure that are necessary to help them survive the competitive business world. As Far as Nigeria is concern, foreign Banks acquisition of Nigerian Banks is or will be a welcomed development, for it will help attract investment in the non oil sector of the economy.

As at today, the Nigerian oil sector attracts the lion share of foreign direct investment into the country, with very little trickling down to the masses. But investments in the financial sector will have an immediate horizontal impact in the public. In reality, there is no hiding place for all 25 Nigerian Banks, as demonstrated by the recent foray of Standard Bank of South Africa into the board of IBTC Chartered Bank of Nigeria.  Many such entrance into Nigerian Banks as Standard Bank of South Africa has just realise or is about to realise are in the pipeline. In particular, as Nigerian Banks who have started robbing shoulders with major international Banks, exposes them. One would have expected that, foreign banks might be interested only in Nigeria’s big four Banks: Zenith Bank, First Bank, Guarantee Trust Bank and Union Bank. But No, all Nigerian Banks are now viable and with the low penetration of banking culture so far in Nigeria, banks are in for a big bang as the economy continues to improve and there will be need for retail banking.

Even though there is no hiding place for the newly recapitalised 25 Nigerian Banks, which may soon cease to be Nigerian, there is a solution for indigenous Nigerian run banks to keep flying their flag. The simplest solution will be for the big four Nigerian Banks such as Zenith Bank, First Bank, Guarantee Trust Bank and Union Bank of Africa to merge. The merger of these great four Nigerian Banks will create a national champion capable of warding off foreign suitors and also become fit to compete at home, regionally and continentally, with foreign Banks. Some Nigerian Banks and their CEOs may want to agitate patriotic fibre in order to remain at the helm of their banks, but shareholders and investors in Nigeria are like those in any parts of the world. They want return upon investment and when foreign banks will try to politely get into the board of any Nigerian bank and meets resistance, the interested foreign Bank will circumvent the CEOs and the normal trajectory, and turn to representatives of shareholders and other investors of such bank or banks. And it is certain that, investors and shareholders will want greater proceed from their financial investments and they will dance to the tune of foreign suitors.

Notes:-

-1) http://eliesmith.blogspot.com/2006/11/in-praise-of-mr-charles-c-soludo-phd.html

Robot  # 1 | 19.08.2007 08:15

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