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NDIC to cover investors in microfinance banks

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The Nigeria Deposit Insurance Corporation (NDIC) has said it will provide 100 percent cover for verified depositors claims depositors in failed 154 Microfinance Banks (MfBs).

The licenses of the banks were revoked by the Central Bank of Nigeria (CBN) last month.
It said from record obtained, the majority of the depositors especially in the MfBs have less than N200,000 in their accounts.
NDIC Managing Director and Chief Executive, Umaru Ibrahim said the corporation in fulfilling its core mandate of ensuring depositors, will soon start paying the verified claims to appropriate depositors, including those in the six Primary Mortgage Banks (PMBs) whose licenses were also revoked.
He spoke yesterday in Lagos during the ongoing at Lagos International Trade fair organized by the Lagos Chamber of Commerce and Industry (LCCI).
He said the licenses were revoked due to the erosion of their capital base, poor liquidity, inept management as well as some insiders helping themselves with loans they never intend to pay back.
It was further worsened by the boisterous lifestyle of management that remained at variance with the philosophy of microfinance banking operations.
Represented by the Head, Communications and Public Affairs, Mohammed Ibrahim, the NDIC chief said the insurer will continue to work with CBN to ensure effective supervision of banks to follow strictly the rules and regulations guiding banking operations.
He said the bridge bank option adopted in former Skye Bank now Polaris Bank was able to let it continue banking operations in the 277 branches of the bank, with over 6000 jobs saved and depositors have unhindered access to deposits in excess of N949.60 billion as at June 2018.
“Meanwhile, all those that contributed to the failure of the bank are being investigated by relevant agencies of the government and would be prosecuted to serve as a deterrent to others,” he said.

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UPDATE:Access bank denies plan to acquire Diamond bank

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The management of Access Bank has denied reports that it is in merger and acquisition talks with Diamond Bank Plc. The bank in a prompt disclosure sent to the Nigerian Stock Exchange, NSE, on Monday said it has not entered into any such discussion with Diamond Bank or any other institution.

The disclosure, signed by Sunday Ekwochi, Access Bank secretary, said the bank would not go ahead with such corporate action without appropriate disclosure to relevant authorities.

“As a publicly quoted company built on best practice, the bank is fully cognizant of its disclosure obligations in respect of any such corporate action and will always discharge its obligations in the most professional manner,” the disclosure said.

The bank, thereafter, urged the market and the Nigerian public to disregard any such information emanating from other sources other than the bank.

Earlier on Monday, Diamond Bank PLC had also denied that it is in ongoing discussions with Access Bank Plc over the possible acquisition. A statement sent by the spokesperson of the bank, Chioma Afe, described as rumor the purported ongoing discussions. The bank also made a prompt disclosure of the same denial to the NSE Monday morning.

A report in The Nation newspaper on Monday claimed Access Bank was on the verge of acquiring Diamond Bank to increase its assets portfolio.

Although the report made no formal attribution for the acquisition plan, it, however, said the merger plan might materialize latest by the first quarter of next year.

According to the report, apart from an agreement in broad terms reached on the acquisition plan by both banks, both parties would soon commence assets valuation to enable them to determine the level of compensation and systems’ integration.

Stakeholders’ interest in the development was heightened by the bank’s public records in recent months.

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FG begins fresh negotiations for power plants

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As the federal government resumes privatisation of some national assets, THISDAY learnt at the weekend that negotiation of fresh terms has begun with preferred bidders of three power generation plants of the National Independent Power Projects (NIPPs) that have been slated for sale.
The power plants to be sold in the first phase of the resumed assets sales are 630.5 megawatts (MW)-capacity Calabar power station; 504MW-capacity plant in Geregu, Kogi State; and the 518MW-capacity plant in Omotosho, Ondo State.
The preferred bidders are EMA Consortium, which initially won the NIPP Calabar Genco at $625 million; Omotosho Electric Power, which won Omotosho Genco at $659.9 million; and Seoul Electric Power Ltd that won that of Geregu Genco at $690.2 million.
The three Gencos were built and currently being managed by the Niger Delta Power Holding Company Limited (NDPHC).
It was gathered from reliable sources that in the resumed negotiations, factors such as sources of funds to finance the acquisition; operational statuses of the three plants; and the financial liquidity challenge of Nigeria’s power market have been key priorities to both government and the investors.
Ten Gencos built under the NIPPs by the NDPHC were initially slated for sale in 2014, but factors, which comprised of market liquidity challenges; inadequate gas supply; and other problems, led to the discontinuation of the process.
A decision to complete the transactions in phases starting with fully operational Gencos was subsequently taken by the federal government.
Also, in February 2016, the Chairman of the NDPHC board, Vice President Yemi Osinbajo, approved the first phase of the transaction to commence with Calabar, Geregu and Omotosho.

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Access Bank is about to acquire Diamond bank

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Access Bank is set to add Diamond Bank’s portfolio to its assets in the next few months. Talks on the acquisition are on, according to sources, who said the merger is set for the first quarter of next year.

It was gathered that both financial institutions have reached an agreement in broad terms on the acquisition. What is left is the valuation of assets, with a view to determining the level of compensation and systems’ integration, the sources said, pleading not to be named because they are not allowed to talk to the media on the matter.
It was learnt that the development leading to the impending acquisition was triggered by Diamond Bank directors who approached Access Bank for intervention in a bid to stave off a possible regulatory intervention that could lead to the withdrawal of the lender’s operating licence in the light of the bank’s depleting capital adequacy ratio on account of a huge Non Performing Loans (NPLs) portfolio put at over N150billion.
It was also learnt that Access Bank directors examined the proposal and, after a series of meetings and evaluations, accepted to acquire the entity. However, the agreement so far reached, it was understood, will not alter the name of Access Bank nor its management structure.
“It’s a complete acquisition and not a merger,” a source, who asked not to be identified, but who is familiar with the transaction, said, adding that one of the major considerations that swayed Access Bank’s directors in accepting the offer was the large branch network of the lender. “ It’s burgeoning NPLs, however, was of serious concern to Access Bank and almost becoming a disincentive, but it has been addressed,” the source added.
It was also gathered that the CBN is well acquainted with the development. The regulator’s acquiescence to the deal was informed by the recent event that led to the liquidation of Skye Bank, and the apex bank not being disposed to following that route because of the huge cost implication that a bailout of Diamond Bank might require, encouraged the discussions, “and the regulator is pleased with the level of discussion

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IMF warns Nigeria over rising debt profile

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The International Monetary Fund (IMF) has cautioned the Federal Government  to be mindful of the country’s rising debt service to revenue ratio and take steps to mitigate the situation.

IMF Senior Resident Representative in Nigeria Mr. Amine Mati yesterday issued the warning in Abuja at the public presentation of the “Regional Economic outlook: Sub-Saharan Africa, Capital Flows and the Future of Work.”

He predicted that Nigeria’s economy will grow by 1.9 per cent this year, up from 0.8 per cent in 2017.

This, according to him, is due to fewer disruptions in oil production

Mati attributed the expected growth to some pick-up in the non-oil. According to him, “the recovery is expected to contribute about 0.7 percentage points to the region’s average growth in 2018 and lift activity in Nigeria’s trading partners through stronger remittances, financial spillovers and import demand.”

Mati lamented that public debt was diverting more resources towards interests payments, and cautioned that though Nigeria’s debt to GDP was quite low, over 50 per cent of the country’s revenue went into interest payments.

He suggested that increase in revenue was very important to bridge the gap in order to ensure that revenue to GDP was sufficient enough to pay up and service the debt profitably.

According to Mati, “Nigeria’s Debt /GDP ratio at between 20-25 per cent is quite low but debt servicing which takes about 50 per cent of revenue is certainly high”.

With regards to Sub-Sahara Africa, Mati said that the regional average was worse than the Nigerian scenario with Debt/GDP across Sub-Saharan Africa ranging between 35-57 in the past five years. He noted that “a lot more of the resources are going into paying interests and there is less to spend on capital expenditure.”

Going forward, the solution the IMF chief said was for massive revenue to be mobilized to address the challenge but African nations especially Nigeria were not doing enough in that regard. Sub-Sahara’s strategy he queried has been to cut expenditure, rather than mobilizing more revenue.

According to him though Nigeria has immense revenue potentials many of which have remained untapped, “adjustment has relied on spending compression rather than revenue mobilization.”

The IMF Senior Resident Representative noted that as the magnitude of capital flows to the region increased, so also the volatility increased. According to him, “portfolio inflows could be very volatile and more associated with consumption than investment in the real sectors of the economy.”

Mr Nnanna Okwu, Deputy Governor, Economic Policy of the Central Bank of Nigeria (CBN) who was represented by Mr Friday Ogwuche said capital inflows into Nigeria responds to both domestic and external shocks. He said Foreign Direct Investments (FDIs), inflows were becoming more diversified in response to the changing structure of the Nigerian economy.

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