More Banks to be Acquired
- By Udo Onyeka
- Published December 5th, 2011
- News
- Unrated
There are strong indications that the number of banks operating in the country may be reduced to one digit in the next few years as a new wave of mergers and acquisitions have been envisaged by experts as necessary response to the imminent glut in deposit and unexpected distress.
BusinessWorld Intelligence authoritatively gathered that the nationalization of three banks in August 2011, by the Central Bank of Nigeria (CBN), is paving the way for the reduction of the number of banks in the country, as it has set fears in depositors and customers.
Investigations reveal that the three nationalized banks, Bank PHB Plc, Afribank Nigeria Plc and Spring Bank Plc, which have transformed into Keystone Bank Limited, Mainstreet Bank Limited and Enterprise Bank Limited, respectively, have lost many of their customers including corporate ones resulting in very low business. Sources close to the CBN and Nigeria Deposit Insurance Corporation (NDIC), said that even though the regulators in their bid to reform the financial sector would want a reduction in the number of banks operating in the country, they would not force banks to merge or acquire weak ones.
BusinessWorld gathered that in spite of the lifeline given by the CBN and intervention by the Asset Management Corporation of Nigeria (Amcon) by purchasing non-performing loans from the banking sector, the nationalized banks may find it difficult to compete with other banks.
The source further revealed that the nationalized banks and other smaller banks are going through difficult situations resulting from high overhead, which makes it difficult for them to compete with the big banks on a level playing field. Since these smaller banks are losing their customers to the big banks on daily basis, the option in the near future may be to surrender to acquisition by the bigger banks.
The source predicted that after the current merger and acquisition, the banking sector will, before the end of 2013, witness another round of merger and acquisition, which would bring the number of banks to about eight.
In fact, some operators of the smaller banks who spoke to BusinessWorld confessed that the banks are experiencing hard times. Apart from the dwindling business resulting from lack of confidence by depositors and customers who are now pitching their business tent with the big banks, lack of infrastructure such as power supply and security have remained nagging problems for banks.
It was reliably gathered that maintenance of generating sets, purchase of diesel and vote for security have become major cost centres for banks.
It is believed that the business combination between Access Bank Plc and Intercontinental Bank Plc, and Ecobank Nigeria Plc and Oceanic Bank International Plc would move the banks into the class of the big banks in the likes of First Bank of Nigeria Plc, Zenith Bank Plc, Guaranty Trust Bank Plc, and United Bank for Africa Plc.
BusinessWorld Intelligence authoritatively gathered that the nationalization of three banks in August 2011, by the Central Bank of Nigeria (CBN), is paving the way for the reduction of the number of banks in the country, as it has set fears in depositors and customers.
Investigations reveal that the three nationalized banks, Bank PHB Plc, Afribank Nigeria Plc and Spring Bank Plc, which have transformed into Keystone Bank Limited, Mainstreet Bank Limited and Enterprise Bank Limited, respectively, have lost many of their customers including corporate ones resulting in very low business. Sources close to the CBN and Nigeria Deposit Insurance Corporation (NDIC), said that even though the regulators in their bid to reform the financial sector would want a reduction in the number of banks operating in the country, they would not force banks to merge or acquire weak ones.
BusinessWorld gathered that in spite of the lifeline given by the CBN and intervention by the Asset Management Corporation of Nigeria (Amcon) by purchasing non-performing loans from the banking sector, the nationalized banks may find it difficult to compete with other banks.
The source further revealed that the nationalized banks and other smaller banks are going through difficult situations resulting from high overhead, which makes it difficult for them to compete with the big banks on a level playing field. Since these smaller banks are losing their customers to the big banks on daily basis, the option in the near future may be to surrender to acquisition by the bigger banks.
The source predicted that after the current merger and acquisition, the banking sector will, before the end of 2013, witness another round of merger and acquisition, which would bring the number of banks to about eight.
In fact, some operators of the smaller banks who spoke to BusinessWorld confessed that the banks are experiencing hard times. Apart from the dwindling business resulting from lack of confidence by depositors and customers who are now pitching their business tent with the big banks, lack of infrastructure such as power supply and security have remained nagging problems for banks.
It was reliably gathered that maintenance of generating sets, purchase of diesel and vote for security have become major cost centres for banks.
It is believed that the business combination between Access Bank Plc and Intercontinental Bank Plc, and Ecobank Nigeria Plc and Oceanic Bank International Plc would move the banks into the class of the big banks in the likes of First Bank of Nigeria Plc, Zenith Bank Plc, Guaranty Trust Bank Plc, and United Bank for Africa Plc.
