IMF, Nigerian banks begin talks on mergers
By Enitar Ugwu
SOME Nigerian banks and officials of the International Monetary Fund (IMF) are currently cross-checking notes on the on-going banking sector reforms.
The talks, which began in Abuja at the weekend, focused on mergers and acquisition, which the banks have embraced at the instance of the Central Bank (CBN).
At the last count, no fewer than seven banks were confirmed to be holding deliberations with the IMF team on how to make the reforms work. The officials reportedly arrived in the country early last week.
The IMF personnel will during the talks, which continue this week, offer technical advice to the participating banks to enable them properly re-align their resources for better results in the restructured industry.
A banker at the forum told The Guardian that the IMF team's talks with the banks centred around the bank reforms in general; their effects on the Nigerian banking industry and the steps that could be taken to get better results.
A CBN source confirmed the development, saying that the IMF officials were in the country on the invitation of the apex bank.
He said that the group will offer technical assistance to banks in the areas of mergers and acquisition.
The arrival of the Bretton Woods institution's representatives brings to an end the long wait for foreign technical assistance for banks as promised by the CBN.
The CBN Governor, Prof. Charles Soludo, had promised on August 5, 2004 in Lagos, that the apex bank would provide and pay for a team of experts to give technical assistance to banks that were ready to embrace its reforms. The IMF representatives were initially expected in Nigeria on August 15, 2004. Their non-arrival had caused some stir among the bankers, who planned to tap from their expert advice.
Soludo had also pledged that the CBN would provide a help desk to fast-track approvals, and equally encourage and facilitate the setting up of an Assets Management Company (AMC) in collaboration with other relevant agencies.
The asset firm, when established would take over the loans of banks' with heavy loan portfolios at a discounted rate to pave the way for a cleaner merger and acquisition exercise.
The CBN, at the end of its 275th Bankers Committee meeting in Lagos in October, said it had prepared a bill, which would be sent to the National Assembly to get an enabling law for the new company.
It explained that the AMC, which would be part of the consolidation process, would handle non-performing assets; (credits given by banks to their customers who are not performing).
The implication of the formation of the company, the CBN said, was that it would help clean up the accounts of banks and provide them with the needed liquidity to boost their operations.
In the calculation of the CBN, a bank with N1.5 billion non-performing assets and a capital base of N1 billion would have had its books in the red.
Such banks could sell their non-performing assets to the AMC at a discounted rate, the CBN said.
Such discount will depend on the risks attached to the assets, whether secured/unsecured, time of maturity and nature of debts, the CBN further declared.
The initial shareholders of the AMC will be the CBN and Nigeria Deposit Insurance Corporation (NDIC). Banks will, however, be allowed to buy shares in the company in the future.`
