Whereas the Central Bank of Nigeria (CBN) recently issued operating licence to three new banks to operate in the country, industry experts have started looking at survival options available to the three new entrants including Titan, Globus, Taj banks.
Some banking experts who spoke to Business Hilights at the Nigerian Stock Exchange (NSE) on Wednesday in Lagos said the three new banks must have done their due diligence on both entry strategy and customer-base build up ahead of meeting licensing conditions.
According to Dr Ken Igboanugo, an investment analyst, “Even though their entry has raised the number of banks in Nigeria to about 23 or so, the most important thing is for the new banks to hit the ground running in the banking basics to avoid early entry-early exit syndrome”.
“To me, the issue is not meeting the entry conditions. The key issues cut across the level of innovation they are coming with, their target sectors and operational discipline so as to avoid the trap of nonperforming loan crisis very early.
Another industry professional, who pleaded anonymity called on the three new banks to begin very early to identify any of the strong banks that absorb each of them in a strategic merger deal.
The expert argued that based on the successful merger of former Diamond Bank and Access Bank few months ago, more financial institutions will join the league so as to deepen their strength, visibility and service delivery.
He further noted that with the new policy regime where money deposit banks loan-deposit ratio had been technically cut short to 60 per cent, chances of leveraging on mopping up treasury bills and government bonds may not continue to stand.
In line with the nature of their operational licences, whereas Titan Trust and Globus Bank will operate as commercial lenders on national and regional scales, TAJ Bank Limited will join Jaiz Bank as the second Nigerian non-interest bank.
It would be recalled that ahead of the banking reform of 2005, monitored by former governor of the CBN, Prof Charles Soludo, Nigeria was the African economy with the highest number of banking institutions (89 banks) operating as commercial and merchant banks.
The reform brushed the number down to 24 universal banks as minimum capital base was pushed up to 25 billion naira from 2 billion naira.
However, signals emerging from the apex bank show that another round of banking recapitalization is coming very soon.
