By Stanley Opara

Monday, 13 Dec 2010

Indications emerged on Saturday that foreign investors’ reluctance to close deals on some of the banks rescued by the Central Bank of Nigeria last year, might be as a result of uncertainty in the Nigerian political environment.

Our correspondent gathered from sources close to the deals that if the political situation of the country worsened on account of the 2011 election, some foreign investors might rest their interests in some of the rescued banks.

Stakeholders in the financial sector, who spoke to our correspondent in separate interviews on Saturday, stressed the need for politicians to play by the rules in the political arena so as not to threaten the recovery of the financial sectors.

The Head, Corporate Finance, Afribank Capital Markets Limited, Mr. Christian Nwajei, in a telephone interview with our correspondent, said foreign investors all over the world were being careful of “the areas or projects they commit their funds to, given the risk factor prevalent.”

He said Nigeria was a haven for investors, adding that, aside from current political developments, there was the need for clarity of direction, especially as it concerned the financial system.

”For Nigeria, foreign investors will always indicate interest in investing, but they will need due diligence before they can push in their money,” he added.

Nwajei, however, was optimistic that by the end of the first quarter of next year (all things being equal), some deals would have been closed on some of the rescued banks.

This, according to him, will materialise ”if the political situation does not deteriorate.”

The Registrar/Chief Executive Officer, Association of National Accountants of Nigeria, Chief Terkaa Gemade, told our correspondent that the players in the country‘s financial system must convince foreign investors that they were committed to improving the status of the rescued banks.

He said it was natural for foreign investors to consider political stability, adding that potential investors in Nigeria should engage foreign investors in strategic talks, while the CBN should only be a catalyst in the process.

According to Gemade, owners of the troubled banks need not hold on to their shares. He said there was the need for divestment so that foreign players could easily fit into the process.

On account of the global financial crisis, the ANAN Registrar said there was now “a ‘go-slow‘ in the normal Western banking.” He, however, advised that room should be given, not only to Western banks, but also to Islamic banks from the East.

A top manager in one of the rescued banks, who asked not to be named, because he was not authorised to speak on the issue, said that it was not possible to isolate the financial system from the political process.

He maintained that most economic and financial decisions taken by most international bodies or foreign investors on economies, were based on political structure and expectations.

He, however, noted that a good number of potential investors for the rescued banks might be taking their time, pending when they would see a clearer picture of the economy, post-election.

Last week a manager at HSBC Global Asset Management‘s New Frontiers fund, Mr. Andrew Brudenell, said, ”Now we see an interesting opportunity in the banking sector. You have got some banks in the stock market that are trading below book value, some are between one and two times, with return on equity that are recovering.”

The senior manager at the fund, Mr. Andrea Nanini, also believes lenders in the United Arab Emirates offer some opportunities due to cheaper valuations following last year‘s debt crisis in neighbouring Dubai.

Source: Punch