ABUJA – Nigeria’s First Bank said on Tuesday it would not form a listed holding company until after the central bank addressed several industry concerns over efforts to reform the 10-year-old universal banking model.
First Bank announced last month it planned to form a group holding company which would own the bank and its subsidiaries to comply with the regulator’s reforms, but did not give a timeframe.
‘There are so many hurdles that we need to cross before the issue of holding company structure can be in place,’ the firm’s Group Managing Director Stephen Olabisi Onasanya told reporters after a bankers’ committee meeting at the central bank.
‘There are tax implications, particularly double taxation issues, that need to be sorted out,’ he added.
Central Bank Governor Lamido Sanusi has said he intends to do away with the universal banking model and separate banks’ core lending business from more speculative capital market activities – such as stockbroking, asset management, private equity and venture capital.
First Bank and Skye Bank have said they are considering a holding company structure to comply with the reforms.
Others have said they plan to spin off subsidiaries, without going into details.
‘Unless some of these things are thoroughly thrashed and dealt with, the formal take-off of the holding company cannot be effective or optimally deployed,’ Onasanya said.
The banking committee also discussed efforts to stimulate the flow of credit to the private sector in sub-Saharan Africa’s second biggest economy.
Following an industry request, the central bank on Tuesday agreed to drop its requirement that banks make a general provision of two per cent on their total loan portfolios.
‘We believe with the level of clean up in the industry there is really no need for a general loan loss provision of two per cent,’ said Razack Adeyemi Adeola, group managing director for Sterling Bank. ‘This will make it a lot easier for banks to grant credit to the economy,’ he added. – Nampa-Reuters
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