A Review of the Nigerian Energy Industry

Five banks own 60% assets of Nigeria’s banking sector – the Banker

banking-hall13 April 2013, Lagos – The top five Nigerian banks owned 60 percent of the banking sector assets in the country. This was contained in a report released, Tuesday, by The Banker, a publication of Financial Times of London.

The top five banks, according to The Banker comprise Zenith Bank, Access Bank, First Bank, Guaranty Trust Bank and United Bank for Africa and owned about 60 percent of overall assets.

It said some foreign investors have suggested Nigeria will soon go the way of South Africa, where the four largest banks have an 85 percent market share.

For them, Nigeria’s mid-tier and small lenders will struggle to survive and several would be taken over by bigger rivals in the next few years”.

The report said: “Nigeria’s banking sector has become highly concentrated over the past 10 years, with the biggest five banks now dominating market share.

But executives at smaller firms are not worried. They insisted that innovation and nimbleness, not to mention the huge scope for growth in Nigeria, would see them make up for their lack of size”.

According to The Banker survey report of the banking sector in Nigeria, “A decade ago, Nigeria had almost 90 banks. Two rounds of consolidation since 2005 in response to a hike in capital requirements, while the second came in the wake of the country’s 2009 financial crisis, have seen the number drop to few more than 20.

As well as creating banks with far bigger balance sheets, the changes have resulted in a more concentrated banking sector.

The Central Bank Governor, CBN, Malam Sanusi lamido Sanusi said: “I’m concerned about the concentration of the banks at the upper end because very large institutions tend to lend to large multinational corporations and invest in government securities.

“They don’t have time for the middle, which is where economic growth happens and jobs are created. I don’t think we’re looking for any more institutions that would be too big to fail”.

Ronak Gadhia, an analyst at security house, Exotix said: “Nigeria is highly under penetrated. There’s a lot of scope for growth. Out of a population of 160 million, there are only about 30 million bank accounts, some of which represent duplicate customers”.

*Gabriel Omoh, Vanguard

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