Central Bank Nigeria cracks the whip

Eurobonds
Guaranty Trust Bank, Access Bank, Fidelity Bank and FirstBank raised $1.45bn in the last three years though Eurobonds. The funds will assist the lenders in financing power, agricultural and other real sector projects. GTBank issued $500m, Access Bank $350m, and Fidelity Bank and FirstBank each issued $300m Eurobonds.

It would appear that the era of a dearth of funds for the private sector is over as corporate bodies can directly access the international capital market for long-term financing. Nnamdi Okonkwo, managing director, Fidelity Bank, says Eurobonds stabilise the bank’s US dollar balance sheet, ease the pressure of demand from customers for tenured loans and enable the bank to target viable dollar-denominated transactions.

He adds that the bank’s commitment to the real sector and SMEs is also reflected in the number of projects it is financing for both the private and public sectors across the major areas of the economy. The availability of the $300m thus released will enable the bank to play in its comfort zone and further leverage the expertise that it has acquired in these unique areas.

Mergers and acquisitions
Three banks are expected to be sold by the Asset Management Corporation of Nigeria (AMCON) before the end of this year: Mainstreet Bank, Keystone Bank and Enterprise Bank.

The race to acquire Enterprise Bank is already on. Ike Chioke, managing director, of Afrinvest West Africa, says Fidelity Bank, Sterling Bank, Standard Chartered Bank and Ecobank Transnational Incorporated (ETI) are among the bidders that have indicated interest. AMCON data showed that the three bridged banks’ liabilities surged to $20bn last year.

Enterprise Bank, described as one of the cleanest banks, has received huge interest from a lot of bidders. The bid process is expected to be completed this quarter, and Mainstreet and Keystone to follow in quick succession by 2015.

Chioke said the era of double-digit earnings growth is gradually fading: the numerous liquidity-tightening policies introduced by the central bank have exerted pressure on the banks’ profitability within the last few months.