Proshare Logo
   Market Date: 17-04-2014   
Agriculture All One Min News Archives Bonds Cap Mkt Sentiments Capital Market CASHLESS NIGERIA Commodities Corporate Earnings Daily & Weekly Market Updates Enterpreneurship ETFs Forex Frauds & Scandals General Global Market Insurance Investors NewsBeat Islamic Finance Mergers & Aquisitions Money Market Mortgage Mutual Funds Nigeria Economy Oil Sector Opinions and Analysis Pensions People Politics Power Products & Services Professionals Property Public Offers Private Placements Regulators REITs STOCKPICKS Taxation Telcos Travel & Tours Unlisted Stocks World of Business

CBN begins Finance Houses’ reforms in 2012

Category: Regulators


  Read (2100)
CBN begins Finance Houses’ reforms in 2012

November 28, 2011

The Central Bank of Nigeria (CBN) will start comprehensive reforms of the Finance Houses subsector in 2012, its Deputy Governor, Financial Systems Stability, Dr. Kingsley Moghalu, has said.

The sector, still wallowing in neglect and lacking clearly defined operational structure, has been relegated to the background.

But Moghalu said the apex bank wants to see Finance Houses that are strong, efficient and able to perform their constitutional roles in the economy.

Achieving these, he said, require comprehensive reforms of the subsector that would enable it to carve a niche for itself in the financial services sector.

Speaking at the weekend during an international workshop on the Operations of Finance Houses in Nigeria, with theme: Finance companies:Relevance in Nigeria’s emerging financial system,  Moghalu said a blueprint for the sector is being fine-tuned by stakeholders and would touch issues, such as recapitalisation, minimum capitalisation, category of operators  and clearly defined roles for the sector. “I would want to assure you that strategic reform in the finance companies sub-sector is of paramount importance and is imminent,” he reiterated.

He said a recent on-site examination of the Finance Houses sub-sector by the CBN revealed that only or 21 per cent of the 104 licenced companies were considered to be sound. Twenty were seen as technically insolvent, 33 were either inactive or had ceased operations, among others. He said factors, such as high level of non-performing loans, gross undercapitalisation, poor corporate governance and weak board oversight, meddlesome interference by principal shareholders, persistent operating losses, weak management among others contributed to the weak financial performance of Finance Houses.

He said the CBN is working on re-positioning and transforming the sub-sector into an efficient financial intermediation vehicle to operate at the middle tier of the  financial system.

However, he ruled out chances of securing a bailout for the sector, adding that the apex bank cannot reform every sector of the financial system at the same time, given that human capital is limited.

The deputy governor said  after stabilising the commercial banks through reforms, it is time to move into reforming the finance houses sector of the economy.

 He said the sector has not shown enough capacity to develop appropriate products that will attract investors to the market. “The apparent lack of focus on its areas of comparative advantage has put the subsector in grave danger of possible extinction. The void created by the sub-optimal performance of finance companies was filled by the resurgence of the activities of illegal fund managers (wonder banks), which also posed serious challenge to the sub-sector,” Moghalu said.

President, Finance Houses Association of Nigeria (FHAN), Eddie Osarenkhoe, said there is the need to broaden the funding of finance houses by authorising them to mobilise savings and idle funds from the public through fixed and savings deposit schemes.

He said the operators will welcome appropriate regulatory controls limiting deposit taking capacity to a percentage of the shareholders’ funds unimpaired by losses.

He requested that the CBN should bring finance companies under the deposit insurance scheme of the Nigeria Deposit Insurance Corporation (NDIC) to boost investors’ confidence in the sub-sector.

Source: Nation

 

 



Tags: , 



Comment With Your Facebook or Yahoo! ID


Latest news


News on Regulators

About Us

Who We Are
Our Team & Partners
Corporate Governance
Advertise with Us
Subscribe / Unsubscribe
Site Map
News Feed - RSS
Newsletter
Contact Us
Message from CEO
Resources

News & Features
The Analyst / Market Data
Investor Relations Portal
The Regulator
Economy & Politics
WebTV
Training Portal
Events Calendar
NewsStands - Online Reputation

Products and Services

Research & Market Intelligence
Analyst Services
Offers & Rights Support Service
Investor Relations Services
Alert & Subscription Services
Share Support Services
Proshare Consult
Event & Seminar Coverage
Market Directory
File a Complaint
News & Analysis

#1minNews
News from TheANALYST
Video News from WebTV
Money Market Updates
Opinions & Analysis
Nigerian Economy
Market Data
The Regulator
Newsletters
Discussion Forum
Policy

Subscriber Agreement
Privacy Policy
Data Policy
Disclaimer
Copyright Policy
Trademarks
Comments in Site
Advertising Code
Conflict of Interest
Content Partnership
3rd Parties

Online Trading and Execution
Training
Legal Support Services
Web/Technology Services
File a Complaint