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Nigeria investigates banking deals, questions CEOs

11 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria’s central bank and its financial crimes agency have launched an investigation into banking deals after allegations of illegal transactions and has interrogated three top banking executives, officials and bankers said on Tuesday

The move signals an escalation of a crackdown on graft by President Muhammadu Buhari who got elected a year ago on a ticket to fix the economy of a country where most Nigerians live in poverty despite its enormous energy wealth.

But analysts said the probe which saw three banking chief executives escorted from their offices is a hit to a sector already reeling from a slump in oil revenues and the country’s worst economic crisis for decades.

“It’s a shock to confidence in the banking sector. They should have handled this investigation more discreetly rather than arresting CEOs in their offices,” said Bismark Rewane, CEO of Lagos-based consultancy Financial Derivatives.

“I fear for the ramifications.”

Banking sources say the Economic and Financial Crimes Commission (EFCC) has been investigating several banks for conducting possibly illegal transactions in the run-up to the March 2016 election to support then-president Goodluck Jonathan, who eventually lost to Buhari.

Corruption spiked under Jonathan but his supporters reject Buhari’s claims that his government had plundered the treasury and accuse Buhari, a former military ruler, of conducting a witch hunt.

The central bank said it was part of the probe to determine “the extent and persons that may be involved in such activities”. It gave no details but said the banking sector remained strong and described the deals in question as “isolated”.

But for banks in Africa’s biggest economy the probe couldn’t come at a worse time as several have recently reported falls in profit while bad loans have burgeoned due to exposure to the ailing oil industry. Some are in the middle of restructuring their business models.

The banks have also been hit by Buhari’s decision to freeze the naira rate, which has made investors reluctant to pour money into the West African nation as they expect him to devalue the currency anyway due to a loss of oil revenues.

Part of the foreign exchange trade has moved to the parallel market as banks have run out of dollars.

 

QUESTIONING

The crackdown started when the EFCC said last week it had obtained a court order to arrest the managing director of Nigeria’s Fidelity Bank, Nnamdi Okonkwo, and question him. A bank official said he had been released on Friday.

Nigerian media outlets, including The Premium Times, citing unnamed sources, said Okonkwo had been arrested on suspicion that he received $115 million from Jonathan’s oil minister, Diezani Alison-Madueke. It was not clear if the central bank was referring to these allegations in Tuesday’s statement.

Alison-Madueke’s lawyer was not immediately available to comment.

She is under investigation over allegations of bribery and money laundering and was questioned by London police in October. Alison-Madueke is still in Britain undergoing cancer treatment, her lawyer has said. [nL5N1223TQ] [nL8N12A0EA]

Fidelity said last week it had appointed an acting CEO and was cooperating in the probe, saying all its transactions had been reported to regulators. The bank declined any further comment.

Sterling Bank, another domestic lender, said on its website that EFCC agents had questioned its Chief Executive Yemi Adeola and other members of its senior management team.

The bank said it did not hold an account of “the public officer from the previous administration” linked to the probe, without elaborating.

A third bank, Access Bank, said agents had visited it on Friday to investigate a transaction involving a customer of the bank and had questioned its group managing director, Herbert Wigwe, in the EEFC offices.

“He was released without charge on the same day,” the bank said in a statement.

An official at the EFCC, asking not to be named, said the investigation was ongoing and declined to give further details.

In January Nigeria’s former national security adviser Sambo Dasuki went on trial on fraud charges in the country’s first high-profile corruption trial since Buhari took over.

 

(By Oludare Mayowa and Ulf Laessing. Additional reporting by Felix Onuah and Camillus Eboh in Abuja; Editing by Louise Ireland and Gareth Jones)

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Egypt’s CIB approves extension for Beltone Financial’s offer for CI Capital

28 April 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

CAIRO (Reuters) – Egypt’s Commercial International Bank (CIB) approved a two-week extension for an offer by Beltone Financial to acquire its subsidiary CI Capital, CI Capital’s Chief Executive Officer Mahmoud Atalla told Reuters.

The offer was due to expire on Thursday.

“CIB approved Beltone’s request to extend the period of the offer to acquire CI Capital by two weeks, ending on May 12,” Atalla said.

In February, CIB signed a deal to sell investment bank CI Capital to Beltone, a unit of billionaire Naguib Sawiris’ Orascom Telecom OTMT.CA, for 924 million Egyptian pounds ($104 million) but the deal has stalled pending approval from Egyptian regulators.

Sawiris said at the time he planned to merge CI Capital with Beltone Financial, which OTMT bought last year, to create one of Egypt’s largest investment firms, but the deal has faced a series of delays.

The Egyptian Financial Supervisory Authority said this month that the deal was delayed pending the resolution of a court case and other issues, including a violation by Sawiris of pre-existing pledges to the EFSA.

Sawiris’s bid for CI Capital was also challenged in February when a unit of the state-owned National Bank of Egypt made a counter-offer. It later withdrew.

Sawiris later said the deal was being held up by national security concerns and criticised the state for meddling in business, adding that it discouraged investors.

 

 

(Reporting by Ehab Farouk; Writing by Asma Alsharif; Editing by Susan Fenton and Ed Osmond)

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Angola probes management at local unit of failed Portuguese bank: official

28 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LUANDA (Reuters) – Angola has opened an investigation into the conduct of the management at the local unit of failed Portuguese bank Banco Espirito Santo, Attorney General Joao Maria de Sousa said on Wednesday.

Banco Espirito Santo (BES) collapsed in 2014 under the weight of its founding family’s debts and exposure to bad loans in Angola.

Portugal’s Novo Banco was carved out as the “good bank” from BES, while its Angolan unit Banco Espirito Santo Angola (BESA) was reincarnated as Banco Economico, with new shareholders including state oil company Sonangol.

“We have opened an inquiry on Banco Espirito Santo Angola management. This inquiry was an initiative of the bank shareholders,” de Sousa told reporters.

“I can not talk about the possibility of arrests in this process because I don’t know the facts.”

 

 

(Reporting by Herculano Coroado, Writing by Stella Mapenzauswa, Editing by Angus MacSwan)

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Kenya KCB Group to manage and may buy closed Chase Bank

20 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s KCB Group has been appointed to manage Chase Bank and could buy a majority stake in the closed lender whose branches will reopen next week, the central bank said on Wednesday.

The Central Bank of Kenya said in a statement that an understanding had been reached with KCB on “modalities to reopen Chase Bank Ltd in the next few days and the eventual acquisition of a majority stake in the bank.” It said KCB would carry out due diligence to inform its decision on taking a stake.

Central Bank of Kenya Governor Patrick Njoroge told a news conference he had received nine indications of interest in the mid-sized lender that was put into receivership this month.

 

 

(Reporting by Duncan Miriri; Writing by Edmund Blair; Editing by George Obulutsa)

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Dubai Islamic Bank aims to open in Kenya before year-end: sources

18 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

DUBAI/NAIROBI (Reuters) – Dubai Islamic Bank (DIB) plans to be operating in Kenya before the end of 2016, despite the Kenyan authorities’ moratorium on issuing new banking licences, according to sources familiar with the matter.

The largest Islamic bank in the United Arab Emirates will start operating at a time when Kenyan banks have come under closer scrutiny from the regulator because of increasing bad debts, prompting officials and analysts to conclude the sector is ripe for consolidation.

Three medium-sized and small banks have been taken over by the regulator since August last year, with the latest, Chase Bank Kenya, taken over earlier this month after a run on deposits.

In November the central bank placed a moratorium on the licensing of new commercial banks in an attempt to bring stability to an industry that has more than 40 banks.

But DIB had been in talks with the regulator before then, meaning a decision on its licence would not be affected by the moratorium, the sources said.

DIB is now awaiting the final go-ahead from Kenya’s central bank, said the sources, as it has already been granted outline approval for a commercial banking licence having planned to open in Kenya last year, only to find the process had taken longer than expected.

In a statement the central bank said on Monday it was processing an application for a banking licence from DIB Bank Kenya, without elaborating.

A separate source at the central bank said DIB was one of a couple of banks expected to start operations in the country this year.

No one at DIB responded to a request for comment.

DIB has already recruited staff for its Kenyan operation, which will initially comprise three branches offering consumer, corporate and treasury services, the sources said.

Kenya will not be DIB’s first foray overseas. It holds stakes in banks in Pakistan, Sudan, Jordan, Bosnia and late last year raised its stake in Bank Panin Syariah, the Indonesian sharia-compliant lender, to 39.6 percent, according to a presentation on the bank’s website.

It would become the third Islamic lender to operate in Kenya, where Muslims account for about 10 percent of the population of some 44 million.

 

(By Tom Arnold and Duncan Miriri. Editing by Greg Mahlich)

 

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StanChart eyes growth from African companies with broader horizons

15 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Growing African businesses looking to sell their products and services beyond the continent present a growth opportunity for Standard Chartered, the bank’s chairman said on Friday.

The group has operations in 16 African nations, including Kenya, and offers services via correspondent banks in 22 more markets in Africa, where sliding commodities prices have put the brakes on previously strong growth.

Rival Barclays has responded by reducing its exposure to Africa, but StanChart takes an alternative view.

“We see Africa as an opportunity to invest rather than exit or divest,” Standard Chartered Chairman John Peace told Reuters in Nairobi, adding that the Internet and other technology is linking more African companies to global trade.

“You can run a business, not just a large corporation but a medium-size business, here in Kenya and be connected to the world,” he said. “Banks, therefore, have a duty to be able to support that connectivity and that is what we are trying to do.”

The World Bank cut its 2016 growth forecast for sub-Saharan Africa this week to 3.3 percent, from a previous estimate of 4.4 percent, citing the drop in commodities prices.

Commodity exporter South Africa and oil producer Nigeria have been hit hard. But Kenya, an oil importer now enjoying cheaper crude prices, has kept annual growth around 6 percent.

Peace said that Standard Chartered’s wealth-management products were finding customers in nations such as Kenya.

“We certainly, as part of our new strategy globally, emphasise the opportunity we have in retail, the opportunity we have in private banking and wealth management, and I think that is true in Kenya and in Africa,” Peace said.

Standard Chartered has not, however, been immune to the commodities slide and has adjusted its risk profile accordingly.

“We tightened our risk tolerance, recognising that things are going to remain choppy for the foreseeable future,” said Peace, who has said that he wants to retire from his post at the end of this year.

 

 

(By Duncan Miriri. Editing by Edmund Blair and David Goodman)

 

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Kenya central bank to help banks that face liquidity pressure

11 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s central bank will provide a facility to any bank or microfinance institution that faces liquidity problems through no fault of its own, starting on Monday, Governor Patrick Njoroge said on Sunday.

Njoroge said the facility, for which he did not give the amount but said had no upper limit, would be available for as long as necessary to provide a sense of calm and reiterated that the financial sector was stable.

“From Monday, we will avail a facility to any bank or microfinance institution that comes under liquidity for no fault of its own. We will avail this facility for as long as is necessary,” Njoroge told a news conference.

Last week, the central bank put Chase Bank Kenya into receivership after its gross non-performing loans rose sharply last year.

The mid-sized bank was the third lender to be taken over by the central bank in nine months, fuelling worries over the health of the sector.

On Saturday, President Uhuru Kenyatta said he supported central bank Njoroge’s actions to protect depositors’ money.

“We are really dealing with any fear, anxiety that is out there,” Njoroge said.

 

(Reporting by George Obulutsa; Editing by Alison Williams)

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Egypt bank CEOs purged as central bank sets 9-year term limit

24 March 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

CAIRO (Reuters) – Egypt’s central bank put a time limit on the tenures of CEOs of commercial lenders on Thursday, launching a purge of several top executives that puts it on a likely collision course with the country’s banking sector.

To help modernise the sector and “inject new blood”, chief executives of public and private banks as well as the heads of foreign banks operating in Egypt would have to step down after nine years, the central bank said in a statement.

The decision is the latest surprise by Tarek Amer, a central bank governor who has moved aggressively to bring dollars into a banking system starved of foreign currency and slow the rapid fall of the Egyptian pound on the black market.

The black market rate hovered at just below 10 Egyptian pounds to the dollar on Thursday compared with the official rate of 8.78 pounds per dollar.

Amer surprised markets in recent weeks by removing dollar deposit and withdrawal caps, devaluing the currency by 13 percent in a single day, declaring a more flexible exchange rate and injecting hundreds of millions of dollars despite critically low reserves.

The decision to cap CEO terms caused consternation among bankers who described it as an unexpected overreach into the private sector’s affairs.

“It’s going to have very bad consequences,” one senior finance official, who asked to be unnamed, said.

The rule will force eight top executives to resign their positions, a senior banking official told Reuters. They include Commercial International Bank’s Hisham Ezz al-Arab and Arab African International Bank’s Hassan Abdalla.

Shares in CIB were down 1.7 percent at 1126 GMT.

There was no immediate comments from the country’s leading banks on the measure, which drew criticism from Hany Tawik, head of Egypt Private Equity Association, a group that represents business community interests.

“This is interference in an essential right of the general assembly to appoint someone that is best suited for them. It’s my right as a shareholder to choose the head of the bank,” he said.

Others such as Angus Blair, the chief operating officer of Pharos Holding, said the move was positive.

“I like the new rule for bank CEOs since it should foster younger talent and help improve institutionalisation.”

The central bank’s foreign reserves have tumbled to $16.5 billion in February from around $36 billion before the 2011 uprising that ousted long-time leader Hosni Mubarak.

His fall from power and the political unrest that followed drove away tourists and foreign investors that were key sources of foreign currency.

Around 40 public and private sector banks operate in Egypt.

Both consecutive and non-consecutive CEO terms will count towards the nine-year limit, the central bank said.

 

(Reporting by Ehab Farouk; Additional reporting by Mostafa Hashem; Writing by Eric Knecht; Editing by Tom Heneghan)

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Old Mutual says to split up, asset management sale eyed

11 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LONDON (Reuters) – Anglo-South African financial services group Old Mutual Plc said on Friday it would split up into its four main businesses, strengthening expectations of the sale or listing of its UK asset management arm.

The break-up of the company, which is listed in London and Johannesburg and has insurance, asset management and banking operations, follows a strategic review announced in November, when former Standard Bank executive Bruce Hemphill took over as chief executive.

Changes to the regulatory environment in Europe and South Africa have made the company, which started out in 1845 as a life insurance firm in Cape Town, more complex to run, it said in a statement.

“It’s a costly structure with insufficient synergies to justify those costs,” Hemphill said.

Old Mutual’s solvency capital ratio under new European rules was 135 percent, lower than many of the other major insurers that have reported earnings so far this year.

The group said it had not yet decided how it would go about spinning off the units but that it expected the separation to be largely completed by the end of 2018.

The company’s four units are Old Mutual Emerging Markets, Old Mutual Wealth, Nedbank Group and OM Asset Management.

It said it planned to cut its majority stake in Nedbank to a minority one.

Old Mutual’s shares have risen since Sky News reported the break-up plans last weekend, and said private equity firms had tabled a multi-billion pound cash bid for Old Mutual Wealth.

Analysts said the unit would be worth 3-4 billion pounds.

The group said its pretax adjusted operating profit for 2015 rose 4 percent in reported currency terms to 1.7 billion pounds ($2.4 billion).

($1 = 0.7004 pounds)

 

(By Carolyn Cohn and Noor Zainab Hussain. Additional reporting by Soumithri Mamidipudi in Bengaluru; Editing by Rachel Armstrong and Mark Potter)

 

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British bank Barclays will leave Africa

8 March 2016 Comments (0) Africa, Business, Featured

barclays africa

South African economic problems and corruption risks on the continent prompt decision to sell majority stake in Barclays Africa.

South Africa’s economic slow down and plummeting currency were key factors in Barclays decision to exit banking on the continent, ending a presence dating back nearly 100 years.

Barclays, one of Britain’s largest banks, announced it would sell its stake of 62.3 percent in Barclays Africa as part of a larger strategy of refocusing on operations in the United Kingdom and the United States.

Barclays has also cut back operations in Asia, Brazil, Europe and Russia.

Banks in 14 countries

Barclays Africa Group, Limited, one of the largest banks on the continent, is worth about $4.9 billion. It has 45,000 employees and 1,267 branches.

It operates in 14 countries: Botswana, Egypt, Ghana, Kenya, Mauritius, Mozambique, Namibia, Nigeria, Seychelles, Tanzania, Uganda, Zambia and Zimbabwe, as well as South Africa, where the company owns and operates the bank network, Absa.

The African bank has been profitable, but the steep fall of the rand last year cut return on equity to 9 percent, below a target of 11 percent.

Barclays believes Africa is a growth area, according to those familiar with the bank’s review of its options. However, the South African issues along with higher risk of corruption prompted its decision to sell its stake.

Leadership seeks to refocus

Barclays CEO Jes Staley

Barclays CEO Jes Staley

The move comes under the leadership of Barclays CEO Jes Staley, who took over in October 2015, the latest in a succession of chief executives who have sought to improve the bank’s outlook following the financial crisis.

The decision is a major turnaround from just a year ago, when Barclays Africa CEO Maria Ramos promised that the bank would rank among the top three in revenue in its five largest markets – South Africa, Botswana, Kenya, Ghana and Zambia by 2016. Barclays Africa at that time was in the top three in only two of its markets – South Africa and Botswana.

Ramos also said the bank was on target to produce a return on equity of 18-20 percent.

Bank could be a tough sell

It was not immediately clear who potential buyers might be although it is unlikely Barclays would put its shares on the market if it didn’t expect suitors.

Despite the relative financial health of the bank, it may be a tough sell, according to analysts.

Garth Mackenzie of Trader’s Corner, said while Barclays Africa was a well-governed asset with a good dividend yield, concerns about risk “seem to overshadow that.”

South African turmoil undermines rand

The rand hit an all-time low in late 2015 after African President Jacob Zuma sparked protests with the ouster of a respected finance minister with an unknown who was then quickly replaced amid political and financial turmoil.

The value of the South African currency fell 40 percent in 2015. The rand has begun to recover but is still down by about 25 percent. Meanwhile, South Africa reported economic growth of only 0.06 percent in the final quarter of 2015.

Dividends cut

Barclays also announced it would cut shareholder dividends in half for the next two years, as the bank continues to struggle to recover from the financial crisis. The announcement prompted a reduction of eight percent in the value of its shares.

Staley, the CEO, said that the bank restructuring was coming to an end. “We are acutely aware of shareholders being tired” that it has taken so long to restructure the company.

Barclays has assured investors that their funds are safe; only share certificates will change hands in any sale. However, Barclays decision to leave Africa raises the question of whether other companies will also shift their focus to markets they perceive to be safer in America and Europe.

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