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Five banks newly licensed by CBN face fresh challenges

Challenges ranging from talent recruitment, extra liquidity, lack of appointment Federal Ministers and regulatory uncertainties are impeding the five new banks licensed by the Central Bank of Nigeria (CBN) from beginning operations, according to banking sources familiar with the matter, who spoke .

We learnt these reasons are not only obstructing the banks from commencing activities but they are also hindering the five banks from starting transacting activities with the general public.

Recall that it was reported on April 29 that the CBN had issued licenses to the five new banks, a move which generated much optimisms in a sector which had being in dire needs of new investments which could serve the country’s over 50 million unbanked and under-banked people.

According to sources, the five newly licensed banks are having serious problem recruiting talents from the Senior Banking Officer (SBO) level to Deputy Managers as most senior bankers are skeptical of moving to a relatively new bank, don’t want to be in banking anymore, or are leaving the country for Canada.

Data from National Bureau of Statistics (NBS) revealed the number of executive and senior staff in the Nigerian banking sector dropped for the second consecutive quarter to 193 and 18,018 in the first three months of this year from 201 and 18,119 recorded in the last quarter of 2018, respectively.

Sources say talents are leaving to well established banks and not new ones as the body of CEOs recently complained about harassment of bankers.

“Bankers are also weary of changing banks,” one of the sources said.
The third issues impeding the activities of the new banks was because their licenses were rushed as Governor Godwin Emefiele was not expected to come back for second term as CBN governor. “Now he is here for another five years, they can now take their time with other statutory regulations,” another source said.

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Economic analysts and market watchers said the decision by President Muhammadu Buhari to renew the appointment of Godwin Emefiele as Governor of the Central Bank of Nigeria will augur well for the economy most especially the banking sector.

Also, the lack of ministerial appointment by President Buhari is another stumbling block because no one wants to commit until they know who will be in key positions like Minister of Finance, Minister of Power, Housing and Works and other important ministerial positions.
“Promises have been made regarding transactions. More certainty is needed around Ministerial appointment and the regulatory environment,” the sources further disclosed.

It was learnt that it takes a while for banks to open operations and there are other key regulatory inspections that are still needed before the banks can legally commence operation.
“Offices have been established and preliminary recruiting is ongoing, but no bank wants to open quietly. So we are not seeing any signage just yet,” sources said.

One of the new banks, “Globus” is said to be spearheaded by Elias Igbinakenzua, a former Executive Director at a Tier One bank is yet to open for business or begin business activities.
“The Bank (Globus), have an office at Sanusi Fafunwa, Victoria Island. Nobody knows what is going on as the whole environment is quiet,” one of the sources said.

The second bank would go by the name “Titan” and is said to have secured the services of a former Heritage bank executive director.

The other three banks remain largely anonymous but would be a mix of micro-finance, Merchant and/or deposit money banks, according to the sources.

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Ayo Akinwunmi, head of research at Lagos-based FSDH Merchant Bank said just like any other sector, the banking business is as good as the license they carry, likewise the CBN license to the five banks which was just an approval in principle that enables the banks to start looking for ways to get new offices, staff and other things they would require to operate.

“If satisfied the CBN will give a final approval; when they have the license they can now start to tell the regulator when they can start operation, because if they don’t start within the stipulated period they will revoke the licenses,” Akinwunmi told us,

Commenting on the challenge of recruiting talents to begin operations, Wale Okunrinboye, an investment analyst at Sigma Pension Ltd., said the fact that banks have been given license doesn’t mean they will commence operation immediately as it will take within the range of three months or a whole year to enable them hire staff, get IT and put other necessary things in place.
“Some of the promoters of these banks are promoters of existing banks; some of them are already established, and I believe some of them will start by September,” Okunrinboye said.

The CBN has been somewhat desperate for banks to increase lending to critical sectors but an economy fraught with risks has tamed lending appetite.

Nigerian banks were unable to grow their loan books in the past year, a signal that the macroeconomic environment remains weak and non-supportive for growth.

The 12 largest lenders quoted on the floor of the Nigerian Stock Exchange (NSE) saw combined loans and advances dip by 6.37 per cent to N12.34 trillion in December 2018, from N13.18 trillion a year earlier.

READ MORE:  Banks face pressure to hasten real sector lending

 

DIPO OLADEHINDE & OLUWASEGUN OLAKOYENIKAN

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