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Banks
have been asked to stop excessive provisioning for non performing loans
in their books as the Asset Management Corporation will buy the rescued
banks loans and also the margin loans of other banks, say some finance
experts.

“With
the execution of this transaction, (a three year zero coupon
consideration bonds) non performing loans concerns across the banking
sector have got a major relief. This clearly lays to rest the days of
provisioning surprises, as the full participation of the banks in this
process cements the days of troubled past,” says Adesoji Solanke, an
equity research analyst at Renaissance Group, an investment banking
firm.

Mr. Solanke added that the sector is expected to be more focused this year, with its non performing loans taken care of.

“We
welcome revamped lending practices and a more defined business focus in
the sector, and see moderate, sustainable, and higher quality earnings
dotting the sky line in the next few years,” he added.

The
non performing loans acquired from the cleared banks (margin loans)
stands at N167 billion, which represents 8.6 per cent of the total non
performing loans acquired today, while the balance 91.4 per cent or
N1.78 trillion came from the troubled banks.

Banks comparative stock performance

Despite
the challenges faced by the banks and the burden of non performing
loans they had to bear, experts say the sector performed relatively
well at the stock market, except for a few.

“The
Nigeria Stock Exchange All Share Index (NSE ALSI) closed 18.93 per cent
up, effectively bucking a two-year bleeding trend. Nigerian banks
played a huge part in this return to the greens, with 76 per cent of
listed banks posting positive (Year to date) YTD returns compared to
just 13 per cent in 2009,” a report from Renaissance Capital stated.

“Sterling
Bank was the sector’s jewel, posting an 88 per cent year to date climb,
coming on the back of a 49 per cent dip in 2009. Skye Bank followed
with a distant 60 per cent (YTD) rise. On the flip side, Ecobank
Nigeria was the poster boy, as it emerged the worst performing stock
amongst the cleared banks for the second consecutive year – 62 per cent
in 2009 and 66 per cent in 2010,” it further said.

According
to the report, First Bank and UBA, alongside Union Bank and Afribank,
all recorded a second year of year to date losses. Oceanic, Unity, and
Wema banks also did well, with average YTD gains of 43 per cent and
only GTBank, Access Bank, and FCMB posted their second consecutive year
of positive YTD performance.

Ecobank
declined to speak on why the bank emerged the worst performing stock
amongst the cleared banks for the second consecutive year, as the
corporate affairs official said he was not in the position to speak on
investment performance matters on behalf of the bank and that the
person authorised to speak on the issue was not available.

A source at the bank, however, said a number of issues may have caused the poor performance of the stock.

“You
know that dividends are among things that actually push stock
performance in the market. Investors may say that dividends have not
been regular.

“Besides,
once you have a parent company, there is the tendency that investors
would prefer investing in the parent company, ETI, than in Ecobank
itself,” the source said.

A major challenge
that the marketing communication industry faces is that of
professionalism. Advertising, Public Relations, Experiential Marketing,
and others are integral components of this industry. It is a thorny
issue that the industry should deal with.

The industry is
threatened with the existence of several so called ‘professionals’ with
little or nothing to offer to enhance growth in the industry. It has
reached the stage whereby anyone with good working knowledge of Corel
Draw is automatically an authority in branding. The case is even more
complicated when they attend any workshop or seminar on branding, as
they immediately become ‘brand consultants’.

Though the
regulatory bodies in the industry have woken up to the reality of the
enormous threat such people pose, this is not enough as drastic
measures should be taken to ensure strict adherence to the rules.

It is disheartening
to note that the industry is not yet regulated like other professional
bodies such as the Institute of Chartered Accountants of Nigeria
(ICAN). There is no way an accountant will practise without being
certified by ICAN or any other professional accounting body. The same
cannot be said of the marketing communications industry. It is now an
all comers affair.

For instance,
advertising faces serious challenges the most. This is due to the
influx of brand mechanics and very soon, we shall have brand
carpenters. The ‘brand experts’ are determined more than before to give
advertising agencies a good fight. To the best of their knowledge and
ability, they have what it takes to make a brand succeed than
advertising agencies.

Separating the wheat from the chaff

There is the urgent
need to separate the wheat from the chaff. I know some advertising
professionals who have honed their skills by studying more about
branding. A good reference point here is Joko Okupe, a renowned
professional who spent years in South Africa gaining more in-depth
knowledge about branding.

My grouse here is
with people who have no pedigree and suddenly became brand experts
overnight. These are the same set of people taking undue advantage of
the industry.

I believe in the
innate potentials of Lolu Akinwunmi as the chairman of APCON. Mr.
Akinwunmi’s appointment at a time like this should bring sanity to the
profession.

For several years,
owners of advertising agencies have only been after their pecuniary
interests. This is indeed a time that the leaders should look back and
take a closer look at the kind of legacy they are bequeathing to the
industry. It has become imperative to harness strengths and potentials
and chart a new way forward for the industry. The leaders should eat
the humble pie and learn from what Kenny Badmus, the brain behind
Orange Academy, has done.

This is a young man
who put his talents into good use by developing a new generation of
creative professionals for the industry. Orange Academy stands tall
above all the established agencies, as none had such vision to uplift
the industry and leave a lasting legacy. The Academy has become a
breeding ground for a distinct set of young minds who in the nearest
future will take the industry by storm.

Some advertising
agencies are globally affiliated but beyond the technical benefits of
such affiliations, what have been the tangible contributions of such
affiliated agencies to the development of the profession in Nigeria? We
have such respected names as FCB, Ogilvy, Leo Burnette, etc. But what
are our own agencies doing to retain their names, decades after
establishments?

A senior colleague
met me in a banking hall the other day and was shocked that leading
agencies are the major defaulters in paying professional dues to AAAN.
Is this not a cause for concern? Why would all sorts of people not
spring up and lay claim to the industry when the leaders are not living
up to desired expectations?

This is indeed a
clarion call to all and sundry to do the right thing at the right time.
It is only then that the menace of unbaked and unripe people will stop
masquerading as professionals.

New Year wishes

I sincerely
appreciate all readers of this column for their support, critique, and
contributions in the last one year. I wish all the best this new year
and may all your dreams come true.

Ayopo, a
Communication Strategist and Public Relations Specialist is the CEO of
Shortlist Limited email-shortlistedprspecialists@gmail.com

The International
Monetary Fund (IMF) is considering playing more important role in
monitoring cross-border capital flow. The Fund’s executive board at a
meeting held last December 17, noted the growing dominance of capital
flows in international transactions for advanced economies, and
increasingly for emerging economies and the need for closer monitoring.

“Volatile capital
flows played a key role in the recent crisis, both in increasing
vulnerabilities and in transmitting shocks across borders. Considering
the Fund’s mandate to oversee international monetary stability,
directors agreed with the need to strengthen the Fund’s role regarding
international capital flows,” it said on its website.

The Bretton Woods
institution said further that macroeconomic, financial, and capital
account policies designed to address domestic concerns in one country
can have significant effects on other countries by generating or
curtailing capital flows, or acting to divert them to third countries.

“The Fund has an
important role in drawing attention to these potential spillovers, and
the possible implications for the international monetary system as a
whole.” Critical elements of this work include gaining a better
understanding of the key drivers of capital flows and of developments
in global liquidity, and the relationship between the latter, domestic
policies, and global financial stability.

Unhindered capital flows

The move by the IMF
raises questions about how unhindered capital flows and the absence of
proper regulation caused disruption in some emerging economies that
otherwise should have been shielded from the global financial crisis in
2008.

Razia Khan,
Regional Head of Research, Africa, at Standard Chartered Bank, London,
said the global crisis was a failure of regulation.

“Need for improved
financial-sector regulation is seen everywhere. Policy makers have
generally backed off, fearing pro-cyclical consequences of tighter
regulation.” Ms. Khan said unprecedented liquidity creation on the
global scale has led to record capital inflows into emerging markets.
“This led to the ‘discovery’ of Africa as the so-called final credit
frontier,” Ms. Khan said.

She added that the
development of African frontier markets will depend on a favourable
macroeconomic backdrop as well as market liquidity.

The IMF observed
that capital flows have conferred substantial benefits by facilitating
efficient resource allocation across countries, but prolonged episodes
of high volatility have also presented serious policy challenges.

They called for
further work to advance in bilateral and multilateral surveillance and
policy advice for member countries, based on extensive analytical work
and taking into account country-specific circumstances and relevant
experiences.

The IMF would be
collaborating with other institutions, such as the Bank for
International Settlements, the Financial Stability Board, and national
authorities, in meeting this goal.

The Bureau for
Public Enterprises (BPE) is in a fix on the next line of action in
selling the Nigerian Telecommunications Limited (NITEL), and its mobile
subsidiary, Mtel, following the recent failure of the preferred bidder
to meet its payment deadline.

New Generation
Consortium, the bid winner announced last February, was, more than
twice, given an extension by the National Council on Privatisation
(NCP) till December 23, 2010 to pay the initial bid security of $750
million (about N112.5 billion) for the offer.

But, surprisingly,
at the expiration of the deadline, Usman Gumi, New Generation chief
operating officer, said that the consortium was only able to send a
letter from its financiers to the BPE as proof of its financial
capacity to make the initial payment, and also the entire bid sum of
$2.5 billion, an arrangement that contravened the bid guidelines.

The guidelines
stipulate that the preferred bidder should make the payment by
electronic transfer or dollar-denominated bank draft to the account
designated by the BPE on or before the expiration of the deadline.

It was learnt
yesterday in Abuja that the privatisation agency has since commenced
consultations on the next line of action to bring to conclusion the
long transaction, which has already failed a record four times since
2001.

“What I have to
tell you is that it has become clear now that that the company (New
Generation Consortium) is either not serious, or that they do not have
the money to pay for NITEL,” a senior BPE official said in an interview.

“After the Federal
Government bent over backwards to extend the payment deadline more than
twice, there is nowhere a serious bidder would not reciprocate by
paying and closing the transaction. When we (BPE) resume from holidays
on Monday next week, the first thing management will do is to seek the
approval of the Presidency, through the NCP chairman, to consider other
options of bringing the bid process to a close,” he concluded.

Sale options

Two options,
proposed in March last year by the Adetokunbo Kayode-led ad-hoc
committee to review the sale, have always been open for consideration
following the initial confusion that trailed the bid, which culminated
in the sack of the then director general of the BPE, Christopher
Anyanwu.

These included a
recommendation for NCP to order the BPE to invite the reserve bidder to
come forward and take up the bid, or for the privatisation agency to
cancel the entire process and start afresh by calling for new
expression of interests (EoIs) from new investors.

Indications are
that the BPE might be willing to adopt the second option of annulling
the entire bid for a fresh start, as most of the groups that
participated in the February 2010 bid considered the New Generation
Consortium’s offer of $2.5 billion too over ambitious, and may not be
willing to have anything to do with it.

Calls to BPE
director general, Bolande Onagoruwa, for a confirmation did not go
through as her special assistant, Azeez Aderemi, confirmed she was yet
to return to the country from her foreign trip.

Some investors at
the Nigerian capital market have criticised the delay in the
appointment of a substantive head for the Nigerian Stock Exchange (NSE).

Emmanuel Ikazoboh,
the Exchange interim administrator, had last November, after 100 days
in office, said his management would name the new head of the bourse in
December while the person should resume in January.

However, on
December 31, the Exchange in a statement signed by Mr. Ikazoboh, said,
“The NSE has completed a part of the multi-stage process for the
selection of Chief Executive Officer (CEO) for the Exchange and the
name of the recommended candidate has been forwarded to the Securities
and Exchange Commission (SEC) for approval.

“The council is
currently awaiting approval of its choice from the SEC. Furthermore,
the council has reached an advanced stage in the selection process for
each of the three Executive Director positions. It is expected that
this process will be completed in January 2011. The Exchange expects
that the persons engaged for all four positions will assume duties no
later than 1 April 2011,” the statement said.

Management inconsistency

Boniface Okezie,
the national chairman of the Progressive Shareholders Association of
Nigeria, said with the new date proposed by the Exchange, “it is
obvious that the NSE and the SEC have something to hide, and it also
indicates that they have not got the candidate of their own choice.”

“Have they not seen
someone who is deemed fit to permanently head the market so that we can
move forward? If they’ve forwarded names, why are they postponing the
person’s resumption till next quarter? They said the head would be
named in December and resume in January. Now it is April. The whole
thing amount to inconsistency of the SEC and the management of the NSE
interim administrator appointed by SEC,” Mr. Okezie said.

In the meantime,
while some market watchers said the postponement will affect investors’
confidence in the market, Dimeji Akintayo, an equity analyst at
Resource Cap, a portfolio management firm, said, “The attitude of the
Exchange and its regulator must change this year to move the market
forward.”

Mr. Akintayo said
the postponement “will not help build confidence” in the market, adding
that “the nation’s lawmakers should step in to investigate the process
and tell Nigerians the truth.”

Market opens high

Meanwhile, trading
activities begin the year on a positive note as gains of 1.34 per cent
were recorded after Tuesday’s proceedings.

At the close of the
first trading day of the year, the NSE market capitalisation, which
gained over N26 billion on the last trading week last year, appreciated
by N106 billion to close at N8.019 trillion from N7.913 trillion.

The Exchange,
however, is expected to hold its annual market report briefing next
Tuesday though Wole Tokede, the NSE’s spokesperson, said the date is
still tentative.

The Central Bank of
Nigeria (CBN) disbursed N8.281 billion during the fourth quarter of
2010 under the Commercial Agriculture Credit Scheme (CACS).

According to data
on the Bank’s website, a total of N96.811 billion has so far been
disbursed to 86 projects/promoters and 18 state governments in the
second tranche since the scheme began in 2009. This brings the number
of beneficiaries to 104, out of 347 projects that applied to benefit
from the scheme.

The CBN in 2009 set
aside N200 billion for onward lending to farmers under the scheme
towards boosting agricultural production in the country. The balance of
CACS funds as at December, 2010 stood at N103.189 billion.

In a memorandum to
the National Economic Council, the Central Bank said that under the
second tranche, 18 state governments: Adamawa, Anambra, Bauchi, Enugu,
Gombe, Kebbi, Kogi, Imo, Kwara, Nasarawa, Niger, Ondo, Sokoto, Taraba
Zamfara, FCT, Akwa Ibom and Rivers accessed N1billion each for
on-lending to farmers’ co-operatives and other areas of agricultural
interventions in their various states.

Food security

The initiative is
expected to enhance food security, reduce cost of credit in
agricultural production, and increase output and employment in the
sector. Target commodities under the scheme include the cultivation of
target crops (rice, cassava, cotton, oil palm, wheat, rubber, sugar
cane, fruits, and vegetable); livestock (dairy, poultry, piggery); and
fisheries.

As at December,
2010, 11 banks: Access, Fidelity, First, Guaranty Trust, Oceanic, Skye,
Stanbic IBTC, Union Bank, UBA, Unity and Zenith are participating under
the scheme. UBA has the highest disbursement of N35.162 billion
followed by Zenith with N13.835 billion, Union, N10.903 billion, First
Bank, N9.135 billion and Skye Bank with N6 billion. Also, N13.934
billion, comprising N11.353 billion from UBA, N2.00 billion from Skye
Bank and N0.581 billion from GTB has been withdrawn in respect of
undisbursed funds.

Eligibility

Under the
eligibility guidelines released by the Central Bank, borrowers under
the scheme shall be a limited liability company, with asset base of not
less than N350 million, and with prospect to grow the net asset to N500
million in the next three years and comply with the provision of the
Company and Allied Matters Act (1990). This, however, is not applicable
to loans taken by state government for on-lending.

Such companies must
also have a clear business plan, provide up-to-date record on the
business operation, if any, and satisfy the entire requirement
specified by its lending bank. According to the CBN, “interest on loan
shall not exceed nine per cent, inclusive of all charges.

To ensure safety of
the funds, the banks bear the credit risk of the loans, while state
government have to sign an irrevocable standing payment order (ISPO) in
favour of the CBN to deduct at source the total amount in default from
the states on monthly basis of State revenue allocation.

The Nigeria National Petroleum
Corporation (NNPC) is to commence marketing of refined oil to U.S., Brazil and
other parts of the world to boost the revenue base of the corporation.

The Group Managing Director of NNPC,
Austen Oniwon, made this known to the News Agency of Nigeria (NAN) in
Brasilia on Wednesday.

Mr Oniwon said already the
Corporation, which hitherto had been exporting crude oil to the U.S., had
concluded arrangements with Brazil’s Oil company, Petrobras, toward
the realisation of this objective.

He said the NNPC had since
indicated its interest to invest in Petrobras’s plan to expand its
refinery in Texas, U.S., from 100,000 barrels to 200,000 barrels per day.

“We indicated to them our interest
to partner with the company to have an outlet into American market instead
of exporting just crude to the American market.

“We can take Nigerian crude, which
is also going into American market anyway, into this refinery,
process and sell as value added product into the American
market.

“This is something that is going to
be beneficial to NNPC and Nigeria as a country,” he said.

Mr Oniwon further told NAN that the
NNPC and Petrobras had concluded discussion to enter into a relationship in the
areas of oil exploration and production, refining and petro-chemical, oil
marketing and trading, gas and power development as well as research and
development.

He said officials of Petrobras
would be coming to Nigeria in February to sign a Memoranda of
Understanding (MOU) with the NNPC for the take off of the partnership.

“They (Petrobras) hope that we
will be able to jointly explore the vast hydro carbon deposit in Nigeria
especially in the deep offshore since the MOU is going to
embrace worldwide operations.

“As partners we will be
able to join Petrobas to operate in their businesses and share their
assets outside Nigeria,” he added.

The GMD said he hoped that the MOU
would also enable Nigeria to develop its gas sector for the smooth operation of
the various power plants being constructed in the country.

According to him, President Goodluck
Jonathan has focused on the development of power plants in Nigeria and most of
these would be driven by gas.

He, therefore, stressed the need for
Nigeria to develop its gas sub-sector, primarily for domestic consumption to
power the power sector.

Mr Oniwon also said he was
optimistic that the MOU would address the challenges of infrastructural
deficiencies in the nation’s oil and gas sector.

“We need partners because the
infrastructure that is going to deliver this gas to the various power
plants is inadequate at the moment and their provision is going to cost a lot
of money.

“But with the new government
policy whereby the cost of power has been reviewed upward, it has made
business and investments in gas project very lucrative

“We believe that Petrobras
will be eager to join with NNPC to develop the gas resources primarily for
domestic use and for export because they are also short of gas in
Brazil,” he said

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NAN

The Central Bank of
Nigeria (CBN) has extended the deadline for the revalidation of
accounts by customers of commercial banks to January 31.

A statement by
Mohammed Abdullahi, the bank’s head of corporate communication, said in
Abuja on Monday that the extension followed public response to the
exercise.

“Having reviewed
the progress made so far and the response of the banking public, the
Central Bank has extended the deadline for the information update of
bank accounts from December 31, 2010 to January 31, 2011,” it said.

The apex bank had
earlier directed that any customer who failed to comply with the
directive would have his or her account(s) suspended with effect from
January 1.

Nigeria will export
around 2.06 million barrels per day (bpd) of crude oil in February,
down from about 2.13 million bpd scheduled in January, trade sources
said on Tuesday.

Africa’s largest
oil exporter will ship 64 full or part cargoes in February, loading
programmes showed, compared with 72 in January. The biggest stream will
be Qua Iboe, which will load 12 cargoes, one less than in January.

Nigeria’s total daily exports in February will be the lowest since June 2010, according to Reuters data.

Even so, supply is
expected to remain far above the production target Nigeria set through
its membership of the Organization of the Petroleum Exporting
Countries. Nigeria’s OPEC output limit is 1.67 million bpd.

The dollar edged
higher on Tuesday after upbeat U.S. data suggested the world’s biggest
economy will accelerate in 2011, helping it hold gains against the yen
and the Australian dollar.

But the dollar
eased against the euro with the single currency moving higher on steady
buying by Asian central banks and comments from a Chinese official, who
said on Monday the country would continue buying Spanish debt.

The euro had
slipped earlier, with some traders citing talk of euro-selling by
investors related to euro zone bond redemptions. The single currency
was up 0.37 per cent from late U.S. trading on Monday to $1.3400, but
traders and analysts remained sceptical about the euro’s bounce.