Ranking: Analysts call for fresh recapitalisation of banks

Economists have asked the Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, to consider instituting a fresh recapitalisation of the nation’s banks to make them bigger than what they are currently.

They spoke against the backdrop of last week’s ranking of top 1000 world banks by The Banker magazine of the Financial Times, London, in which no Nigerian bank was listed among the top 280 banks in terms of size.

The analysts argued that the failure of the Sanusi-led CBN to consolidate on the banking sector’s last recapitalisation set off by the former  Governor of the apex bank, Mr. Charles Soludo, was why no Nigerian bank was named among the first 100 banks in the world.

None of the 22 commercial banks operating in Nigeria is among the top 280 international banks in the world, according to the 2013 Top 1000 World Banks Ranking.

The report also indicated that only 13 of the 22 banks made it to the top 600 in the world.

An economist, Professor Abel Awe of Ekiti State University, said although Nigerian banks had been operating under harsh economic environment, they could have been ranked better if given a little push.

Awe said, “I think Nigerian banks should have ranked among the top 100 banks in the 2013 ranking by The Banker. The recapitalisation that started during the Soludo era was not sustained by Sanusi.

“Sanusi focused on risk management and removal of toxic assets from the banks, which is quite laudable. However, if Soludo’s policy had been sustained through recapitalisation, Nigerian banks would have been among the top 100 in that ranking. It is Nigeria’s problem; there is no continuity in government’s policy.”

He added, “How many banks have you seen coming to the capital market to raise money in the last few years? Some of the banks were oversubscribed during the recapitalisation of those days. While it is good to maintain sanity in the system, I think the current CBN management should look towards recapitalisation.”

However, the Chief Executive Officer, Financial Derivatives Company, Mr. Bismarck Rewane, said The Banker magazine ranking of top 1000 world banks had nothing to do with the strength of Nigeria’s banks, adding that “Nigerian banks are strong and they are doing fine.”

Rewane noted the ranking had to do more with total asset and had nothing to do with the health of the banks.

“The ranking has more to do with total assets; if you look at some of the banks that ranked better, they have been existing for over 400 years. Apart from the First Bank, majority of the Nigerian banks are less than 40 years old.”

The 13 Nigerian banks that made the top 600 in ranking are Zenith Bank Plc, First Bank Nigeria Limited, Guaranty Trust Bank Plc, Access Bank Plc, United Bank for Africa Plc, Ecobank Plc and Fidelity Bank Plc, First City Monument Bank Plc.

Others are Skye Bank Plc, Diamond Bank Plc, Stanbic IBTC, Union Bank Plc  and Standard Chartered Bank.

Zenith Bank was ranked number one in Nigeria among top 1,000 world banks.

According to the report, Zenith Bank moved 35 places from 322 in the world last year to 287; First Bank moved from 338 to 367, Guaranty Bank moved to 417 from 455; Access Bank moved to 506 from 541; and UBA moved to 553 from 563.

The Banker ranks a Chinese bank as the world’s largest, overtaking two American finance giants.

Industrial and Commercial Bank of China leapfrogged the US banks to top the global ranking of banks with the most capital.

According to a Sky News report, the shock ranking has highlighted the growing size and importance of Chinese lenders.

ICBC topped The Banker magazine’s annual list of the top 1,000 banks for the first time.

The magazine relegated the Bank of America to third from first, while JPMorgan Chase remained in second slot.

China’s ICBC was ranked third last year by the magazine, which is owned by the Financial Times.

The rankings are based on Tier 1 capital as a measure of a bank’s ability to lend on a large scale and endure shocks.

ICBC has for some time ranked as the top bank by market value.

Britain’s HSBC, which gains much of its earnings from Asia, was fourth in The Banker’s list, with China Construction Bank (CCB) ranked fifth. China had four banks in the top 10 and 96 in the Top 1,000.

Its top four lenders – ICBC, CCB, Bank of China and Agricultural Bank of China – filled the top positions for profit in 2012.

ICBC’s $49bn (£32bn) profit put it top of the profit table for a third successive year.

Total profit for the biggest 1,000 banks is now back close to levels achieved before the 2007/09 financial crisis, but the regional share has shifted significantly,

The Banker said that in 2006 European banks accounted for 46 per cent of global profits and 58 per cent of assets, but last year that had dropped to less than two per cent of profits and 43 per cent of assets.

Asia’s banks have lifted their share of profits to 56 per cent from 19 per cent in the same time and increased their share of assets to 35 per cent from 22 per cent.

 

Source: Punch (by Oyetunji Abioye)

 

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