HSBC, UBS Banks Leave Nigeria

by Bamidele Ogunberu Posted on November 3rd, 2018

Abuja, Nigeria : Global Banking Giants HSBC Holdings Plc (HSBC,HSBA.L) and UBS Group AG (UBS), have closed their offices in Nigeria, the Central Bank of Nigeria (CBN) said in a report on Friday as it revealed foreign investment had fallen sharply from a year ago.

The bank said foreign direct investment in Nigeria fell to N379.84 billion ($1.2 billion) in the first half of the year from N532.63 billion ($1.7 billion) a year earlier.

It did not give reasons for the bank closures.

HSBC, Europe’s biggest bank, was not available to comment and UBS declined to comment.

The CBN said the outlook for the Nigerian economy in the second half was “optimistic” given higher oil prices and production but rising foreign debt and uncertainty surrounding the 2019 presidential election were a drawback.

Investor confidence in the West African country has been shaken since the central bank in August ordered MTN to bring back $8.1 billion to the country, part of profits which the South African telecoms firm sent abroad.

An HSBC research note dated July 18 said a second Buhari term “raises the risk of limited economic progress and further fiscal deterioration, prolonging the stagnation of his first term, particularly if there is no move towards completing reform of the exchange rate system or fiscal adjustments that diversify government revenues away from oil.”

Loan losses

The central bank also said three lenders failed to meet its minimum liquidity ratio of 30 percent without naming them.

It added that non-performing loans (NPLs) have dropped to 12.4 percent as at June 2018 from 15 percent a year ago, still a long way above its five percent threshold.

“To further consolidate on the improvement, the Central Bank of Nigeria directed banks to intensify efforts at debt recovery, realisation of collateral for lost facilities and strengthening their risk management processes,” it said in the report.

In September, the regulator withdrew the license of Skye Bank for failing to recapitalise. It then transferred Skye’s assets to a “bridge bank” Polaris wholly-owned by the state-backed asset management company AMCON.

Nigerian banks have been trying to raise fresh capital after huge loan losses worsened by an economy that has just emerged from a recession.

Diamond Bank last week denied it was in talks with investors to raise cash but said it was managing its capital, which borders on the regulatory minimum, to grow.

Another lender, Unity Bank, has been seeking to raise fresh funds to recapitalise.

HSBC Holdings plc

HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from approximately 3,800 offices in 66 countries and territories in our geographical regions: Europe, Asia, North America, Latin America, and Middle East and North Africa. With assets of $2,603bn at 30 September 2018, HSBC is one of the world’s largest banking and financial services
organisations.

UBS Group AG

UBS Group AG is a Swiss multinational investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centers as the largest Swiss banking institution in the world

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Bamidele Ogunberu

Bamidele Ogunberu

Staff Writer
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