After five weeks of political commentary, I return this week to the economy, and particularly the financial sector. The announcement last monday March 28, 2011 of an imminent tie-up between Access Bank Plc, the dynamic Nigerian banking group with increasingly continental franchise and presence in the UK; and Intercontinental Bank Plc, one of Nigeria’s most aggressive and fastest-growing banks until it unfortunately ran into trouble with the Central Bank of Nigeria (CBN) in August 2009, gave me something to write (and cheer) about. I have always believed that the final test of Sanusi Lamido’s banking sector “reforms” would be successful and pragmatic resolution of the cases of the eight banks under CBN control such that they return to ethical private ownership and competent management, preferably in the hands of core investors which are local or international banking groups.
The eight banks matter involves significant systemic issues with limited options-nationalise the banks, which would involve significant legal and constitutional obstacles; liquidate them, which would require huge Nigerian Deposit Insurance Corporation (NDIC) and tax payer resources in paying off insured depositors and huge losses to depositors over the insurance threshold affecting government institutions, businesses, churches and religious bodies, associations and individuals, apart from the time and disruption that the process would entail; or continue the current unsustainable status quo with the institutions’ capital provided by CBN and control by persons with full managerial powers, no entrepreneurial or equity interest and accountable in reality to themselves only! The matter is made less tenable because four of the banks (Intercontinental; Oceanic; Union and Bank PHB) are large, systemically important (i.e. “too big to fail”) whose untidy exit or liquidation could damage the whole system!
The Access-Intercontinental merger, when it is finally consummated will be excellent for the Nigerian banking sector and economy. It resolves in a seamless manner all the systemic risks identified above. Depositors in Intercontinental are permanently assured of the safety of their deposits; investors salvage some value from their endangered investments; employees preserve their jobs and careers; and tax payers and CBN can retrench their lifeline to the Bank! It is also a “win-win” for Access Bank investors and stakeholders. They acquire a stronger platform for growth in profits, deposits and assets from the emerging, larger institution. The combined Access-Intercontinental increases Access Bank’s branch network by 300%; doubles deposit base and assets; has access to a larger customer base and key corporate and institutional accounts; and can expect to leverage synergies and complementarities that should produce efficiencies in margins, ROA and ROE.
It is good that in this transaction, all facts are on the table-both are well-known banks with ascertainable investors and managers; the transaction brings together two banks with strong corporate and institutional banking franchises and complementary commercial and retail network and produces a formidable African bank; and the transaction appears to have emerged through a transparent, competitive process. Both institutions have experience with mergers and acquisitions so hopefully the process of integration should go relatively well.
…and the Ugly-Jega’s Huge Flop!!!
I was inclined to complain about Professor Attahiru Jega’s INEC during and after the voters’ registration exercise in January, but I kept quiet in the national interest, to preserve the credibility of the 2011 elections! My name has been on every voters register since 1983 when I turned 18 years and I have voted in that year’s and every single election conducted in Nigeria since then. I had the greatest difficulty getting registered in Jega’s own-making five visits to the registration unit before I could get registered! I subsequently found cause for discomfort with some of the trends suggested by the figures revealed by the professor.
But nothing could have prepared me for the embarrassment and disgrace of Saturday April 2, 2011! INEC officials did not get to our polling unit on Admiralty Way, Lekki till 10.30am. My wife and I arrived the venue shortly after to find utter confusion. The place was filled with enthusiastic citizens eager to exercise their franchise, but INEC’s process of accreditation had NOT been well-thought through. Some good citizens (Kate Henshaw, Sunny Irabor…) had taken the initiative help get things organised. One good lady had provided three tables. But then in our polling unit 017, eighty per cent of us could not find our names on INEC’s register. My name, my wife, many neighbours and friends were missing perhaps transferred to Katsina, Bayelsa or Ebonyi State!!! If the election had held, perhaps we would not have voted, in spite of our best efforts.
It was with shock that we received the news that the elections had been cancelled nationwide. Professor Jega received all the funds he asked for from the president and the National Assembly; He made us amend the Constitution and Electoral Act severally to accommodate his mistakes and misjudgements; The funding requests he made were confounding, but the nation obliged him; He bungled the voters registration exercise; He announced INEC’s readiness to the nation and the world 24 hours to the polls! I think its time we begin to watch this gentleman very carefully. It is an insult on Nigerians to describe what has happened as an act of courage on Jega’s part! Incompetence, poor logistics and project management; lack of judgment and poor managerial abilities are the traits I see on display. And soon, I may be questioning motives as well!!!
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