The banking industry will experience the merger of 10 banks in a matter of weeks while two Islamic banks will open shop before the end of the year, says Central Bank of Nigeria.

Deputy Governor, Financial Sector Surveillance, CBN, Dr. Kingsley Moghalu, disclosed this in London in an interview with Bloomberg.

“About five bank mergers will take place in the next couple of weeks, to be followed by two or three more in the “near future,” Moghalu said

In bid to sanitise the industry, the apex bank introduced a number of reform measures including the sack of executive management of eight banks and the injection of N620 billion bailout fund. The eight banks are expected to seek fresh capital injection which may be through a core investor or through merger and acquisition.

On the reform, Moghalu said: “It’s going very positively. Nigeria is a case of very innovative” reforms and is “ahead of the curve and confidence is returning to the banking system, though we are not out of the woods yet.”

Last year, some investors including some local banks submitted bids for the rescued banks and it is expected that before the second half of the year, the merger or acquisition of the banks would have been completed.

Unconfirmed reports said Vine Capital will sign an agreement to buy Afribank Nigeria Plc, Access Bank Plc will invest in Intercontinental Bank Plc, while First Bank of Nigeria Plc will take a stake in Oceanic Bank International Plc. First City Monument Bank Plc plans to invest in Finbank Plc, and Capital Alliance will sign an agreement with Union Bank of Nigeria Plc, it said.

Moghalu also said two or three “conventional banks” have expressed interest in opening “Islamic windows.” He declined to name the banks.

“We recognise Islamic finance is a very helpful system and we want to develop it,” he said at a conference in London. “Nigeria is a huge potential market. We have about 70 per cent of the population who are unbanked. In the North, you have a very, very strong market, people are yearning for this.”
AMCON to commence issuance of Proper bonds
Meanwhile, the Asset Management Coporation of Nigeria, AMCON, said it would soon commence the second phase of its bond issuance programme which would lead to the issuance of Proper Bonds.

“Non-performing loans to be purchased under the second phase will be from the healthy banks and others we missed in the first phase,” Mustapha Chike-Obi, Chief Executive Officer told Bloomberg.

“The hard deadline” for the bond issuance is March 31, while the recapitalization of the bailed-out banks will be completed in the second quarter, he said.