The Executive Director, Finance and Operations, Asset Management Corporation of Nigeria, Mrs Mofoluke Dosunmu, has said that there is no more segregation in the banking industry.

Dosunmu said that confidence had been restored in the bridged banks and were now competing like other banks in the country.

A statement by AMCON on Wednesday quoted her as saying, “In the first place, we have restored confidence in the industry. Before, you had a kind of segregation in the market; some banks were healthy; some were not. Now, you don’t have that anymore. Initially, when the banks (bridged banks) started, they did lose some depositors’ funds. But when the customers saw that anytime they walked into those institutions, they could get their money back, they started banking with them.”

She noted that the bridged banks had been able to reduce their costs of funds because current account balances now constituted a higher proportion of their deposits unlike a year ago when term deposits, which were at high interest rates, formed the bulk of their deposits.

Dosumu said, “They’ve decreased their reliance on term deposits. If you look in terms of percentages from what you had before – where you had current account deposits being only about 30 per cent, now it’s almost 50 per cent. So that has reflected in the confidence back in the banks.”

She noted that there had also been some drastic cost cutting steps taken by the institutions. 

She said, “I would be careful to say whether they (the bridged banks) are profitable. What I would say is that they are taking necessary measures, corrective steps, to ensure that the banks run better; they are going forward, showing improved performance. You find that the rate of loss has definitely changed drastically for those that haven’t broken even. And some of them have broken even. 

“But if you’re talking about a whole year, while they might have been making losses as at December, between then and now, they’ve broken even. But if you’re looking at a whole year’s profit (2011), you might not find profit at the end of that whole year but if you compare with what it was before, you will see an appreciable difference.”

Source: Punch/Ademola Alawiye