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Nigerian Banks : Surviving a tough regulation

by Business News Report

By Omoh Gabriel, Business Editor
When on July 6 the CBN Governor Professor Charles Soludo announced a thirteen point reformed agenda for the banking industry at an expanded meeting of the bankers committee, bankers realised they are in for a tough time. Of the thirteen-point agenda announced by the governor only one was top most in the minds of bankers. That was the new capital base of banks. N25billion: have it by December 31st, 2005, or cease to be a bank in Nigeria.
Most banks, then, saw it as an impossible task and took almost to the street in campaign against it. Some saw some sense in it and immediately set to work. Five months after, nearly all the banks in the country are singing the praise of the policy saying they have been playing in a marginal form. Bankers now insist that even if Soludo decides to back down on the policy there is no stopping them from grouping together to form bigger banks.
As at the time of this survey six banks seem ready to stand on their own. They are First Bank with a shareholders fund of N36.2 billion, followed by Zenith with N36 billion shareholders fund from its IPO, Union Bank with a total shareholders fund of N34.5 billion, and Guaranty Trust Bank which has already acquired Inland Bank with shareholders fund of N34.5 billion. Other banks that are likely to retain their brand names are UBA with a shareholders fund of N18.1billion which will go to the capital market this year to raise additional funds, STB which 2004 accounts is not available. Afribank which is already in the market scanning for funds and Intercontinental bank with its consolidation plan with Gatewaybank, Equity Bank and Global bank.
Other banks are not letting go. They are forming strategic alliances in their bid for survival and five of such have emerged thus far.

The very first is the proposed marriage between Allstates Trust Bank, Gulf Bank, Hallmark Bank, Lion Bank and Universal Trust Bank which came out with a merger plan in the name of First Consolidated Bank. The banks signed a memorandum of understanding to work out details of the merger. The deal which was brokered by top executives of the five banks saw representatives of the five banks coming together to agree on the modalities for the merger. The decision of the five banks to merge saw family egos and ethos shelved as representatives of the five banks agreed to form an alliance, which is seen as a forerunner to the emergence of Nigeria’s first mega merger in banking history, a thing that looked almost impossible before now.
Shortly after that, the Intercontinental group announced its own consolidation plan.. In the group are Intercontinental Bank, Gatewaybank, Global Bank and Equity Bank.
Yet another is the Astrabank made up of Assurance Bank, Guardian Express Bank, Mannybank and First Atlantic bank

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