Two Foreign Banks Shut Down Operations In Nigeria

Agency ReporterNovember 3, 2018

1 2 minutes read

The Central Bank of Nigeria on Friday said two foreign banks, HSBC and UBS, have closed their offices in Nigeria.

The CBN also revealed that foreign investment had fallen sharply from a year ago as FDI slumped to N379.84 billion ($1.2 billion) in the first half of the year from N532.63 billion ($1.7 billion) a year earlier.

The apex bank also said that the outlook for the Nigerian economy in the second half was “optimistic” given the increase in global oil prices and production.

It added however that rising foreign debt and uncertainty surrounding the 2019 presidential election was a drawback.
Reuters reports that investor confidence in Africa’s biggest economy has been shaken since the CBN got entangled in an alleged illegal repatriation of funds battle with telecom giant, MTN Nigeria.

The CBN had in August ordered MTN to bring back $8.1 billion to the country, part of profits which the South African telecoms firm sent abroad. The Nigerian government also slammed the company an additional tax levy. Both parties are now seeking mutually beneficial resolution.

The apex bank, however, did not give reasons for the shut down of operations of the two foreign banks in its report.
HSBC has however been at loggerheads with the Nigerian government lately.

In July, a research note by the the bank said a second term for President Muhammadu Buhari “raises the risk of limited economic progress and further fiscal deterioration, prolonging the stagnation of his first term, particularly if there is no move towards completing reform of the exchange rate system or fiscal adjustments that diversify government revenues away from oil.”

The government in its reaction had contested and dismissed the bank’s claims.

Meanwhile, the central bank also said three lenders failed to meet its minimum liquidity ratio of 30 per cent. It, however, did not name the lenders, adding that non-performing loans (NPLs) have dropped to 12.4 per cent as at June 2018 from 15 per cent a year ago.
The figure is still a long way above its 5 percent threshold, it said.

“To further consolidate on the improvement, the Central Bank of Nigeria directed banks to intensify efforts at debt recovery, realisation of collateral for lost facilities and strengthening their risk management processes,” the report said.

Two months ago, the apex bank withdrew the license of Skye Bank for failing to recapitalise. It transferred Skye’s assets to a “bridge bank”, Polaris.
Polaris has since begun operation.