Six commercial banks are likely to seek mergers and acquisitions in the New Year – no thanks to the shock created in their assets and balance sheet sizes in the face of declining oil prices.
Crude oil prices have fallen to as low as $37.11 per barrel from over $110 per barrel a year ago. This has adversely affected banks’ oil assets. Besides, the level of non-performing loans in the sector has risen.
The Managing Director, Sterling Bank Plc, Yemi Adeola, who disclosed this yesterday said he envisaged possible shrinking in the number of local banks in the New Year. There are already moves suggesting that trend, he said, but did not name any bank.
Speaking at an end-of-year media briefing in Lagos, the bank chief said two international banks were discussing with local lenders on possible acquisition. He said the year has been a challenging one for the economy and the banking sector, adding that banks are now finding ways to wriggle out of these challenges, including a tough regulatory environment.
He said oil price could also come further down, and called for a more efficient tax system, blocking of revenue leakages and focus on areas neglected in the past – “from agric to solid minerals and other commodities we have in abundance. We also need to support Small and Medium Enterprises to create opportunities that will create jobs,” he said.
Adeola said the Nigerian banking industry was the most regulated sector in the country thereby affecting banks’ performance.
THE CITIZEN
Crude oil prices have fallen to as low as $37.11 per barrel from over $110 per barrel a year ago. This has adversely affected banks’ oil assets. Besides, the level of non-performing loans in the sector has risen.
The Managing Director, Sterling Bank Plc, Yemi Adeola, who disclosed this yesterday said he envisaged possible shrinking in the number of local banks in the New Year. There are already moves suggesting that trend, he said, but did not name any bank.
Speaking at an end-of-year media briefing in Lagos, the bank chief said two international banks were discussing with local lenders on possible acquisition. He said the year has been a challenging one for the economy and the banking sector, adding that banks are now finding ways to wriggle out of these challenges, including a tough regulatory environment.
He said oil price could also come further down, and called for a more efficient tax system, blocking of revenue leakages and focus on areas neglected in the past – “from agric to solid minerals and other commodities we have in abundance. We also need to support Small and Medium Enterprises to create opportunities that will create jobs,” he said.
Adeola said the Nigerian banking industry was the most regulated sector in the country thereby affecting banks’ performance.
THE CITIZEN
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