After wowing the world with their recapitalisation exercise, Nigerian banks quickly fell into bad habits and a stock market bubble swiftly followed. However, some of them are beginning to see the light.
Strong (Thriving, may be in a position to profit from the crisis):
A pledge by Nigeria’s new central bank governor, Lamido Sanusi, to take tough action to clean up the financial sector has triggered a sharp sell-off on the Nigerian Stock Exchange amid fears he may force banks to declare big losses.
In a recent interview with the Financial Times, Lamdio Sanusi said he would conduct an audit of banks’ exposure to the local capital market as a first step to tackle an overhang of bad debts that have sapped trust in the system. Sanusi also vowed to remove bank executives he found unfit for office, warning it was “criminal” to lie about results — an explosive statement in an industry rife with suspicions about opaque accounting.
“The tone of his language is what’s causing the panic,” said Kato Mukuru, a banking analyst with Renaissance Capital. “We want to see steps to reform the system — but what he said in the interview has put us back to where we started in terms of uncertainty.”
Mr Sanusi said on Thursday that he would like to see a sustainable recovery in the market brought on by improved regulation and disclosure. “When regulatory decisions are subject to censorship by stockbrokers or shareholders then we are in trouble,” he told the Financial Times.
Many investors have urged the central bank to conduct exactly the kind of overhaul Lamido Sanusi proposes, to instil discipline in a sector where internal controls have often failed to keep pace with the banks’ exponential growth. Read the rest of this entry »
