2011: Will Banking Sector Still Remain Static in Qtrs 1,2
It was Sanusi Lamido Sanusi, governor of the Central Bank of Nigeria (CBN) who said that proper implementation of budgets would not only make the economy of the country move forward, but also make her realise its vision 20:2020 initiative.
However for any budget to work, Sanusi noted that different stakeholders charged with the responsibility of executing the national budget must strive towards achieving an effective and efficient budget formulation and implementation process in order to realise the vision of being among the 20 largest economies by 2020.
However, as the nation awaits the signing of the 2011 budget into law while every other sub-sector in the economy strategise on how to capitalise on the 2011 budget, the banking sector might be forced to suffer for the utterances of its regulator.
In the words of Mr. Okechukwu Unegbu, managing director of Maxifund Investment Limited “2011 for the banking sector will be characterised by a very lull beginning.”

A peep into 2010
The year 2010 witnessed a series of activities in the banking sector ranging from the establishment of the Asset Management Company of Nigeria (Amcon), the inauguration of its board, review of the universal banking model and the categorisation of banks into international, national and regional, as well as re-introduction of merchant banking. Although it did not happen in the industry per se, a major event that shook the industry was the disclosure by the CBN governor that the National Assembly consumes 25 per cent of the nation’s overhead budget.
Amcon was established to assist in recapitalising and restructuring the balance sheets of deposit money banks, as such the Senate approved a 10-member board for it. The board members include Aliyu Belgore, the chairman, and Mustapha Chike Obi, the managing director /CEO. Hewet Benson, Abbas Jega, and Dosunmu Benedicta are the three executive directors, and Eniye Ambakaderemur, is a non-executive director. The permanent secretary, federal ministry of finance, and the deputy governor, financial system stability, of the Central Bank of Nigeria (CBN), are also non-executive members of the board. The other statutory non-executive members of the board are the director general of the Securities and Exchange Commission (Sec), and the managing director of the Nigeria Deposit Insurance Corporation (NDIC). Amcon is a brainchild of Sanusi with a capital of N20 billion. It is expected that once Amcon takes over the bad loans, the banks which made provisions for more than $16 billion dollars in loan losses at the end of the third quarter of 2009, will be able to resume lending again.
Mr. Chike Obi, who is a former Goldman Sachs investment banker and son of the late renowned Nigerian mathematician, Chike Edozien Umuezei Obi promised to stick to the three cardinal objectives of the company. He said the three objectives are to acquire the toxic loans, manage them, and dispose the acquired assets at a profit.
The CBN also concluded the review of the universal banking model in Nigeria and issued new rules and guidelines for the new licensing regime in compliance with the statutory provisions of the Banks and Other Financial Institutions Act (BOFIA).
Mohammed Abdullahi, head, corporate communication of the CBN said the move is part of the blue-print for reforming the Nigerian financial system which includes the enhancement of the quality of banks, financial system stability and evolution of healthy financial sector.
The new guidelines include regulation on scope of banking business which repeals the universal banking regime and requires banks to divest from all non-banking business. The guideline defines the new types of banking licences, permitted activities and transition timelines for restructuring. Also special banks/institutions such as the primary mortgage institutions, microfinance banks, non-interest banks, development banks and discount houses shall continue to perform their specialized roles within the framework of existing guidelines.
The year 2011
Mr. Okechukwu Unegbu observes that the national budget is a serious issue to consider for the 2011 operational year in the banking sector. Because of the face-off between Sanusi Lamido Sanusi,  and the National Assembly, Unegbu stated that the banking sector could experience a lull in the first and second quarter of 2011.
According to Unegbu, with the National Assembly insisting on having details of allocation for some federal government parastatals in the budget, there is every tendency for the banking sector to be static come first and second quarter of 2011.
Unegbu noted that the feud which is not likely to end soon could consequently lead to a stall in the operation of banking activities, adding “The first quarter of 2011 will be slow as not much is expected to happen. Since budgets take long to be implemented in the country, nothing will still happen in the second quarter, consequently the sector will still move at a slow pace. Hopefully, it is in the third quarter that things might begin to pick up.”
Another aspect that will slow  the pace of activities in the banking sector, according to Unegbu is Amcon because bringing the full regulation of the Amcon Act into play in the sector may not be easy.
Unegbu noted that since Amcon is relatively a new initiative in Nigeria, it is going to experience teething problems. “There is every likelihood that Amcon might experience teething problems in the forms of learning the operational processes, staff problems,  reporting problems, as well as inadequate knowledge on the part of the management as some of them are not core bank personnel.”
According to Unegbu these challenges might appear small but in reality, if not handled by experts might defeat the motive for which the Amcon was established. 
Mr. Sonnie Ayere, chief executive officer of Dunn Loren Merrifield Ltd stated that year 2011 is going to be better than 2010. According to him, the market will settle down when the (Amcon) commences full operation.
Ayere noted that when Amcon starts doing its work, the banking industry might notice some quick wins. However, a hurdle that the CBN needs to cross is the culture of non implementation of policies, as there is skepticism about the success or otherwise of the Amcon.
On the categorisation of banks into international, national and regional cadres, Ayere stated that the move is long overdue; stressing that he is a strong proponent of bank separation, adding that the bank categorisation initiative can only work when these banks are truly independent and not under any holding company.
In his words “If we are to see a re-emergence of merchant banks into the system, they should be made to be totally independent and should not be under a holding company. It is not yet uhuru because things can still go wrong; hence separation of risks can go a long way to mitigate any disaster in the future.”
According to Ayere, the CBN followed the right route by introducing bank categorisation; however, there should be separation of risks.