Nigerian banks up for grabs

Finance minister considers state ownership as “interim” measure

  • By Thierry Ogier
  • 06 Oct 2009
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Nigeria may take banks into temporary state ownership to stop them collapsing, its finance minister has said.

“We will consider government ownership as an interim arrangement until the time they are able to get buyers,” Mansur Mokhtar told Emerging Markets in Istanbul.

He insisted that this would be an “interim arrangement” to avoid the collapse of at least nine troubled banks, including some of the largest of the country. Mokhtar added that he would top short of nationalizing the institutions.

“We are also encouraging mergers and acquisitions, and this [government ownership] would be as a last resort, if we are not able to attract foreign or local capital,” Mokhtar said in an interview.

The establishment of a dedicated asset management company to clean up banks portfolio is also part of the Abuja government’s arsenal, he said.

Lamido Sanusi, Nigeria’s central bank governor, said in an interview with Emerging Markets: “We have done stage two. We now have to build on it.”

Sanusi, who was appointed in June, has acted swiftly to remove the chief executive officers of five large banks and ordered an audit in their books. These five institutions accounted for more than 80% of non performing loans, he said.

The average non performing loan ratio is around 40% of assets, according to Sanusi. A large number of banks were heavily exposed to the oil and stock markets before the global financial crisis erupted last year.

Mokhtar commented: “You had oil prices going up, you had the asset bubble. Both were related. When oil price is high, there is a lot of liquidity in the Nigerian capital market. A small number of banks took very large exposures in these sectors, which were heavily correlated. So you had an oil price crash, a stock market crash, and that wiped out part of their assets.”

The Nigerian central bank has enjoyed the support of the international community, including the IMF and the African Development Bank, for its banking sector reconstruction efforts.

Donald Kaberuka, AfDB president, said: “Swift action was taken by the central bank of Nigeria to deal with the problem at the source. They have taken all the appropriate actions.”

Meanwhile, Mokhtar has acknowledged the difficulties of the largest West African country to meet the financing gaps to meet its infrastructure needs. Nigeria is now pushing for a $200 million loan from the AfDB, after receiving a $500 million World Bank loan last month. Its previous attempts to tap the international bond market failed as a consequence of the global crisis.

“We will continue to count on these institutions to provide support and technical assistance, especially in banking sector regulation and supervision,” Mokhtar said.

  • By Thierry Ogier
  • 06 Oct 2009

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
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1 Citi 244,235.70 910 8.87%
2 JPMorgan 223,767.95 1021 8.13%
3 Bank of America Merrill Lynch 211,276.97 750 7.68%
4 Barclays 166,062.82 634 6.03%
5 Goldman Sachs 162,877.27 537 5.92%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
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  • Today
1 HSBC 25,385.87 103 7.10%
2 Deutsche Bank 25,125.19 81 7.03%
3 Bank of America Merrill Lynch 22,023.57 59 6.16%
4 BNP Paribas 18,766.65 109 5.25%
5 Credit Agricole CIB 18,157.63 105 5.08%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
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1 JPMorgan 12,578.87 55 8.17%
2 Citi 11,338.07 71 7.36%
3 UBS 10,682.06 44 6.93%
4 Goldman Sachs 10,419.53 53 6.76%
5 Morgan Stanley 10,194.88 57 6.62%