New model will change banking in Nigeria

By Ademola Alawiye

Tuesday, 26 Oct 2010

As banks scramble to unfold their plans in the light of the new banking model set to take off next year, analysts have said that the new banking model will change the face of banking in Nigeria.

According to the analysts, who spoke with our correspondent on Monday, the new model with other reforms ongoing in the banking sector will bring a complete change to the sector.

Although, they said it was too early to conclude if the changes would have a positive or negative effect on the sector, the experts said that the reforms might not be completely favourable.

The Managing Director, Boaz Management and Financial Strategies Limited, Mr. Oluwole Ibikunle, said Nigerians should expect a new banking sector after the reforms were over.

Ibikunle said, ”Every change in policy comes with its concomitant effects. When the Central Bank of Nigeria is through with its reforms, we will begin to see the effects of the changes in full. In 2001, when universal banking was introduced to the system, it came with its changes in the banking landscape.

He, however, said that the complete overhaul of the previous model was wrong.

Ibikunle said, ”Policy changes is a normal thing in life but when it becomes too much, it shows that we are not getting things right. This is about the third time they are changing models. I think the CBN should have adopted some parts of the universal banking model, and not completely cancel the model.”

Speaking in the same vein, a financial analyst, Mr. Shina Adeoye, said the focal point of banking would definitely change with the new model.

Adeoye said, ”The new banking model will bring a new look to the banking sector which will also affect other sectors of the economy. It‘s too early to say if these changes will impact positively or negatively on the banking sector. With what we have seen so far in all the reforms, things may be difficult for other sectors relying on the banking sector.”

He added, ”Although, the effect of universal banking in the short-run was seen as positive but we are made to understand now that the long-run effect of universal banking could be disastrous. So we can‘t jump into conclusion now because these policies are not short- term policies.”

The CBN had in March 2010, as part of the ongoing reform agenda, circulated a draft exposure report detailing its intent to modify the current banking model/arrangement and defining a new banking licensing regime, going forward.

Source: Punch


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