As the economic situation of the country impacts the financial industry, Nigerian banks have been advised to reconsider their game plan and strive towards cost cutting measures and preserve their capital base.
The Central Bank of Nigeria (CBN) had recently raised concerns on the financial stability of the industry, having recently intervened in the affairs of Skye Bank amidst a rising non -performing loan portfolio in the industry generally.
According to the executive director, Services, Heritage Bank, Mr. Niyi Adeseun, the present economic condition calls for calculated move by banks in the country.
He noted that, “we need to begin to do things differently. We need to protect capital, liquidity and ensure that even if you cannot predict where revenue will come from we need to manage cost.”
“This is not the time to have bad loans, some are bad already but the fact is everything is about economics.”
“The main stay of the Nigerian economy is crude oil and it has gun down the way it is. We don’t know how long this will take but if we do the right thing and support the government, we will be out of it. Notwithstanding, we are doing the right thing as a bank by ensuring that we keep our cost low.”
Stating that the economic situation in the country was an opportunity for the banking industry, he said “what is happening in Nigeria today is actually happening all over the world. Africa, Europe, and America it is the same problem we are facing, it is economics, it is cyclical. The last time we had economic downturn was in 2008 and this is 2016.”
“This whole thing started in 2015, and we did not do anything about it but trading blames. Where we are now requires patience and we need to produce to get out of it. The much talked about economic diversification has not been taken serious, if it has been, the situation would have been different,” he said.
The bank he said planned to join the league of systemically important banks (SIBs) in the country within a five-year time frame. Currently, the SIBs in Nigeria today are FirstBank of Nigeria Limited, Guaranty Trust Bank Plc. (GTBank), Zenith Bank Plc, United Bank for Africa Plc. (UBA), Access Bank Plc., Skye Bank Plc., Ecobank Nigeria and Diamond Bank Plc.
The bank which has grown its balance sheet size to over N600 billion in its three years of existence was described as one of the nation’s healthiest and fastest growing banks by its shareholders.
Following recent rumors that the bank the was co-owned by President of the Senate, Dr. Bukola Saraki and former chairman of Skye Bank, Dr. Tunde Ayeni, the shareholders of the bank had said the report which is a de marketing strategy “is most mischievous and totally out of order” adding that while Saraki had sold his stake, Ayeni had less than one per cent holding in the bank.
