By Stanley Opara

Monday, 22 Nov 2010

Stakeholders in the financial sector have said that the Central Bank of Nigeria’s refusal to rush the recapitalisation process of rescued banks will pave the way for successful deals.

The experts, who spoke in separate interviews with our correspondent on Saturday, said for the process to yield the required dividend, stakeholders should invest time in the exercise so that proper evaluations and assessments would be carried out.

They, therefore, called for more consultation and negotiations among the banks, the Central Bank of Nigeria and potential investors.

A top official of one of the rescued banks, who spoke to our correspondent on the condition of anonymity, said his bank was currently doing well, adding that it had no problem with potential investors.

He said, ”Real customers that know how the bank operates have no fear dealing with us (though we are termed rescued bank), because the CBN had said no bank would fail.”

According to the source, the international community and the potential investors in the banks believe in the pronouncements of the CBN.

He said the inter-bank guarantee provision of the apex bank, which was expected to last till June next year, had seriously helped to boost outsiders’ confidence in the sector.

He said the CBN pegged the tenure of the current management of the rescued banks at two years, to lapse in August next year, adding that there was still time to get the entire process right.

”We still have time, except people want to fast-track it,” he added.

However, the Registrar/Chief Executive Officer, the Institute of Credit Administration, Dr. Chris Onalo, said regulators in the financial sector and policy makers in Nigeria should recognise that the Nigerian investment climate was not very friendly.

He said, ”I don‘t think we should be in a hurry. That is not to mean that unnecessary allowances should be given.”

Onalo said there should be intensive disclosure and sufficient time to put all the facts and figures together, stressing that nothing should be hidden.

The ICA boss called for stability of the regulatory environment, noting that investors were usually particular about matters of regulation.

Another manager in one of the banks, who also asked not to be named, said that the recapitalisation process should be allowed to reach its natural conclusion without unnecessary interference.

”The industry has not been as open as this before. The process is on and has never been as transparent as this,” he stressed.

He said the programmes of the Asset Management Corporation of Nigeria would help in determining the true position of the banks and ensure that they were in good condition. He added that adequate time, in a relative sense, was needed to make this materialise.

The source explained that AMCON had promised to bring to zero level, shareholders funds of the troubled banks (which were hitherto negative), adding that the process would make the banks more attractive since any investor intending to buy, would commence fresh recapitalisation without inheriting any toxic asset.

”AMCON is now the catalyst that will drive the process. The horizon is bright indeed,” he noted.

 

Source: Punch