The rising profile of Nigerian banks – Globasure News Updates.

  • July 11, 2013
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Though not among the first 200 banks globally, but one made a show among the first 300 banks, while 12 others made the first 600 banks. To many still, this might not be the best of results and what the country could offer to the world, but we do well too to remember where we are coming from.

Reforms in the banking sector may have upset so many things, perhaps by the personal perception of how it all started, were conducted and concluded, but there seems to be a palpable change and if sustained, could lead to further improvement.

The underlying factor so far is the fact the change is constant and every factor involved in the change must be aligned such that the change can be positive, especially in addressing the inherent challenges associated with developing and under-developed system, which Nigeria is one. The consolation may be further derived from the fact that there are more than 1000 banks in the world.

The two prominent regulators have certified Nigerian banks, post reform, in the financial system- Central Bank of Nigeria and Nigeria Deposit Insurance Corporation, with Mallam Lamido Sanusi, known to have said that the financial institutions were back to profitability. This may have been the “positives” for their inclusion and rising profile, but they should not lay down their guards nor rest on their oars.

In the rankings released over the weekend, Zenith Bank topped Nigerian banks in this year’s Top 1000 World Banks Ranking of The Banker Magazine of the Financial Times Group, London, United Kingdom.

According to a news release from the Country Representative, Nigeria, The Banker, Kunle Ogedengbe, 13 Nigerian banks made the ranking this year and it saw the return of Union Bank to the league of top global banks and they included Zenith Bank, FirstBank, Guaranty Trust Bank, Access Bank, United Bank for Africa, Ecobank, Fidelity Bank, First City Monument Bank, Skye Bank, Diamond Bank, Stanbic IBTC and Standard Chartered Bank.

Further analysis of the rankings showed that Zenith Bank moved 35 places from 322 in the world last year to 287, FirstBank moved from 338 to 367, Guaranty Bank moved to 417 from 455, Access Bank moved to 506 from 541 and UBA moved to 553 from 563.

These movements according to analysts was a good sign of the improvements of the soundness of the Nigerian banks among the world global banks and the robust monetary policies of the Central Bank of Nigeria.

Ogedengbe stressed that the ranking was usually based on the definition of Tier–1 Capital as set out by Basel’s Bank for International Settlements (BIS) and that it aimed to show global international banks’ soundness in relation to the Basel guidelines on capital adequacy.

The percentage change in the Tier-1 Capital, which underlines the strength of banks, for Zenith Bank increased by 23.82 per cent, the highest in the wholly Nigerian banks that made the ranking.

In the capital asset ratio of soundness parameter, Zenith Bank came top at 17.70 per cent followed by Guaranty Trust Bank at 16.23 per cent. Third is Fidelity Bank at 15.67 per cent, Standard Chartered Nigeria is fourth at 13.38 per cent followed by FCMB at 12.00 per cent and FirstBank at 11.96 per cent, Access Bank at 11.60 per cent, Stanbic IBTC at 11.55 per cent, Ecobank at 11.14 per cent, Skye Bank at 9.90 per cent, UBA at 7.65 per cent, Diamond Bank at 7.31 per cent and Union Bank at 6.35 per cent.

Basically, these banks should justify their various rankings by the type business strategies they have, perhaps there might be need to revisit some. According to the guideline on Nigeria Sustainable Banking Principle (NSBP), there is no doubt that many banks would need to reassess their objectives and strategies to reach them. The NSBP therefore include:

Principle one: Our Business Activities Environmental and Social Risk Management

This holds that the bank or organisation or firm will integrate environmental and social considerations into decision-making processes relating to business activities to avoid, minimise or offset negative impacts.

Principle two: Our Business Operations Environmental and Social Footprint

The bank or organisation will avoid, minimise or offset the negative impacts of business operations on the environment and local communities in which it operates and, where possible, promote positive impact.

Principle three: Human Rights

The bank or organisation will respect human rights in its business operations and business activities.

Principle four: Women’s Economic Empowerment

The bank or organisation will promote women’s economic empowerment through gender inclusive workplace culture in our business operations and seek to provide products and services designed specifically for women through our business activities.

Principle five: Financial Inclusion

The bank or organisation will promote financial inclusion, seeking to provide financial services to individuals and communities that traditionally have had limited or no access to the formal financial sector.

Principle six: Environmental and Social Governance

The bank or organisation will implement robust and transparent environmental and social governance practices in its respective institutions and assess environmental and social governance practices of its customers.

Principle seven: Capacity Building

The bank or organisation will develop individual institution and sector capacity necessary to identify, assess and manage the environmental and social risks and opportunities associated with our business activities and business operations.

Principle eight: Collaborative Partnerships

The bank or organisation will collaborate across the sector and leverage international partnerships to accelerate its collective progress and move the sector as one, ensuring our approach is consistent with international standards and Nigerian development needs.

Principle nine: Reporting

The bank or organisation will regularly review and report on our progress in meeting these principles at the individual institution and sector level.

Strict compliance to the principles was assured of resulting to

• moving the banking sector as one to drive development that is economically viable, but socially relevant and environmentally responsible,

• enhanced collaboration and cooperation between the banks to achieve transformational change,

• consistency with international standards and good practice, signalling enhanced governance, and

• leading the way: for banks in Africa and beyond as well as other sectors.

The rationale for sustainable banking principle was hinged on the fact that it is the right thing to do for Nigeria; risk management is enhanced, it fosters good and lasting relationships, ensures steady flow of revenues, the organisation’s reputation is potrayed in good light and the regulator requires it, hence there must compliance.

One way or the other, banks in Nigeria need to reappraise themselves in the light of the above, if they are to sustain and improve on the rankings in the future.

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