Nigeria’s bankers are now better prepared to deal with a global crisis than in 2008, when the sector almost collapsed after a margin-lending crisis, according to central bank governor Lamido Sanusi.
In an exclusive interview with Euromoney, Sanusi says the country is on the cusp of fixing the crisis that swept across the sector in 2008 and 2009. “The banks are more adequately capitalized and their exposures are more controlled,” he says.
Sanusi has overseen a state-sponsored M&A process to recapitalize institutions that the central bank intervened in and bailed out in 2009. The process is now coming to a close after shareholder approval of private-sector buy-outs of five of the intervened banks, alongside recapitalizations by the state, at the end of September.
This followed the central bank’s move in June to give a new end-September deadline for the recapitalizations, after court cases opposing the takeovers collapsed. Shareholders were further spurred to accept the takeovers and the consequent dilution of their holdings, after the nationalization in August of three banks that the central bank deemed unlikely to reach acceptable deals with private-sector partners.
“The five banks [understood] very clearly what would happen to them at the end of September if they decided they didn’t want to go into a transaction: either take a route where they remain minority shareholders or get a generous cash payment, or lose everything,” says Sanusi.
Kingsley Moghalu, Sanusi’s deputy for financial-sector stabilization, tells Euromoney it is now very likely the central bank can keep to an end-December projected deadline for withdrawing interbank guarantees extended to the intervened banks after the 2009 bailout.
Bolaji Balogun, CEO of Chapel Hill Denham, one of the advisers in the M&A process, says after the recapitalizations the sector capital adequacy will be more than 20% – making this one of the best-capitalized banking sectors in Africa, and putting Ireland’s banking-sector clean-up to shame.
Read the November edition of Euromoney for the full story of Nigeria’s banking sector clean-up from the main people involved in the process, and hear how the sector is changing, with new rules to separate investment banks from commercial banks.
