Commending the Central Bank of Nigeria’s banking reforms, the International Finance Corporation announced Monday that it is increasing its support to major financial institutions in Nigeria.
The IFC, a member of the World Bank group said the support is part of its broader strategy to contribute to the country’s banks in the aftermath of the global crisis.
Solomon Adegbie-Quaynor, Country Manager, Nigeria, said this move was due to the success of the Central Bank’s reforms.
“We have noticed the positive transformation towards a sounder banking system,” Mr Adegbie-Quaynor said.
“What attracts us now is the ability of the Central Bank to foresee the challenges of the industry and the bold steps taken to address them.
“We are here to demonstrate our support for the ongoing banking reforms. We are one of the most experienced financial institutions globally and we believe this move will have a catalytic effect on other finance bodies because we need organisations to also invest in these banks because we have confidence in the system now” he said.
IFC’s Vice President for global industries, Jyrki Koskelo said at the conference that underscoring this new commitment, it has agreed to provide $200 million in long term funding to Guarantee Trust Bank, subject to its board and shareholders’ approval.
Mr Koskelo also announced that the organisation has agreed to provide $100 million in convertible sub-debt and senior loans to First Bank of Nigeria, including participation by the IFC Asset Management Company in the equity- based financing.
“IFC is stepping up its support for the financial sector in Nigeria to help local banks grow more and contribute to private sector development. In the wake of the crisis, Nigeria has made significant progress toward creating a policy environment in which good banks can thrive. This is the right moment for IFC and private investors to work with banks best positioned to realize growth profitability” he said.
Nine banks benefit
The IFC officials said the bank was interested in investing in seven more banks, aside from GTB and First Bank, adding that it may also extend its investment to more banks as the need arises. These banks include Diamond, Zenith, FCMB, Eco Bank, Access, Stanbic IBTC and UBA.
Mr Adegbie-Quaynor said the organisation is also out to help stabilised banks acquire some of the rescued banks.
“We would be working with acquiring banks to acquire the distressed banks. That is the area we are helping to address now, in respect to non performing loans and the Asset Management Company” he said.
The IFC officials said the organisation is committed to partnership in Nigeria that help encourage a growing banking sector through a coordinated crisis response. The strategy it hoped to use in partnering with the Nigerian banking sector includes ‘providing long-term financing to help well-managed systemic banks to achieve growth objectives within the constraints of the banking crisis, improve their reach to underserved segments such as infrastructure and small and medium enterprises.
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