*Senate moves to summon Soludo
LAGOS—THE N25 billion new capital base announced Tuesday by the Central Bank of Nigeria (CBN) has sparked off merger discussions among some banks, according to indications yesterday.
Meanwhile, the Senate is set to invite the CBN to justify the new policy. Senator Farouk Bello, vice chairman of the Senate Committee on Banking and Finance, said yesterday that there were fears that the new requirement might lead to the creation of oligopolies in the sector.
There were also indications yesterday that the apex bank had suspended its planned introduction of N1,000 note. Industry sources said yesterday that mergers were seriously being considered by banks under the same group. Such banks include the Intercontinental Bank group, comprising Global Bank PLC, Equity Bank Limited and Gateway Bank Limited; the Union Bank group made up of Union Merchant Bankers Limited and Union Homes Limited; the First Bank group comprising FBN Merchant Bankers; the Afribank group comprising Afribank International (Merchant Bankers) Limited; and the Guaranty Trust Bank group comprising Guaranty Trust Bank PLC and Access Bank PLC.
Other banks that are likely to merge are those believed to have the potentials to complement each other. In this category are Standard Trust Bank, Continental Trust Bank Limited, IBTC Limited and NAL Bank PLC. Mergers might also emerge among banks whose shareholder base has similar geo-political background. Merger possibility in this regard could cover Diamond Bank Limited, Citizens International Bank Limited, Hallmark Bank Limited and ACB International Bank PLC; merger of Trade Bank PLC, City Express Bank PLC and Marina International Bank Limited; merger of Wema Bank PLC, National Bank Limited, Cooperative Bank PLC. Zenith International Bank Limited, it was gathered, though has the wherewithal to meet the new capital base, may be disposed to merging with banks like Fortune Bank International Limited, NNB Bank PLC and Manny Bank PLC. A merger between Equatorial Trust Bank Limited and Devcom Bank Limited is expected to occur naturally as both belong to the Mike Adenuga group.
At a press conference at the National Assembly yesterday, Senator Bello (ANPP, Kebbi Central) while appraising earlier calls by the Senate Committee for an increase in the capital base of the banks, said the CBN went beyond expectations in its requirement of N25 billion. “I received the news of the CBN announcements of the new capital base with joy and excitement and simply put, I have been vindicated because early this year, I had proposed that capital base of banks be increased and then I suggested N10 billion,” Senator Bello said.
“When the Central Bank announced it yesterday (Tuesday) that it is N25 billion, I am at loss as to what justified N25 billion. Why are we moving from N2 billion to N25 billion? It doesn’t seem to make sense to me. Whatever you are trying to achieve, I think it is better you achieve some moderations,” he said as he canvassed a gradual approach in the increase in the capital base to a level of N10 billion.
According to him, the sudden increase would lead to mergers that could leave the industry having just between five and 10oligopolies in the banking sector. Besides stifling competition, Senator Bello, a former bank director, warned that it would lead to massive retrenchment in the sector.
Meanwhile, banks’ chief executives would be meeting today under the auspices of the newly created Banks’ Chief Executives Forum. The meeting which is the first by the forum is expected to discuss among other things the reform package announced by the CBN governor on Tuesday.
But in a swift reaction to the proposed N25 billion capital base, the Management of Guaranty Trust Bank Plc has boasted that it would achieve the requirement by the end of next year.
The Deputy Managing Director (DMD) of the bank, Mr. Olusegun Agbaje, who was in Abuja to market his bank at an Investors Forum, said the bank already had a capital base of N12 billion and that with the current N10 billion public offer, it would be easy for it to hit the CBN target.
According to him, the public offer would be over-subscribed and that the bank had made adequate arrangement to ensure that all subscriptions succeeded rather than returning such money to the applicants. “We have positioned ourselves to be one of the banks that would make the N25 billion. We have laid the foundation and with what happened yesterday, this will be a bargained share. We already have a capital base of N12 billion and we are optimistic that the public offer will be over-subscribed. Even if all we get is N10 billion, you know that all that will be remaining to make up that N25 billion would be about N3 billion.”
On his part, the Vice-Chairman of Intercontinental Bank Plc, Dr. Erastus Akingbola, challenged the apex bank to create a level playing ground for all the banks, and not to make laws to their disadvantage. Dr. Akingbola spoke in an interview after the commissioning of the bank's permanent branch in Ilorin by Governor Bukola Saraki with all the state functionaries present.
Dr. Akingbola said: “Once the CBN ensures a level playing ground, the new generation banks will be encouraged. The CBN should also not make laws to the disadvantage of the new generation banks.”
