Owing to growing foreign interest in the Nigerian banking Sector , the Central Bank of Nigeria (CBN) will soon roll Out a framework that will restrict foreign ownership of banks in the country.

Making this known to THISDAY in New York, the Governor of CBN, Professor Chukwuma Soludo, said the framework would deter foreign institutions from taking over the top ten banks in Nigeria , as they collectively account for 71 per cent of the country’s banking System .

According to Soludo: “the kind of interest being generated in Nigeria by foreign institutions now has raised an important issue. We Are coming up with something pretty soon.

We will work Out a framework on the issue of the structure for our banks whereby we shall be a bit reluctant towards foreigners taking over our top ten Local banks which constitute about 71 per cent of the banking Sector .” “If you review the model by Singapore, which engineered an International Financial Centre , you have over 100 of these International banks operating there.

“But there is one rule that prevails: They Are free to come and operate, they will get a licence to operate, but they Are not allowed to try to take over any of three conglomerates (domestic banks).

These Are the three conglomerates that account for 70 per cent of their entire banking Sector ,” the Governor disclosed. Soludo explain that the introduction of the policy regime would not amount to the restriction of inflow of foreign direct Investment into the Financial Sector as foreign institutions wishing to do Business in Nigeria will be free to apply for banking licenses.

He said, “They can come into the country as Long as they can bring N25 billion.” Soludo noted that foreign investor preferring to invest in existing banks with the structures and branches in place could only do so in smaller banks that do not make up the top ten. “You see this is very a strategic decision that as a country has to make.

We Are still lucky because as we develop, we must be mindful of these scenarios. You can cannot be indifferent to who ever owns a banking System because he that controls the Systems , owns the economy.” Soludo noted that there is fundamental difference between foreign owned and domestic Bank in terms of their behaviour.

“In terms of their intermediation and why they Are there, the foreign banks and there four of them in Nigeria , for All decisions they have to make a call to London and New York.“Just take a look at them and see where there branches Are located and the type of businesses they do. They just want to take minimal risks, take their returns and go and that is why it has become of strategic importance.”

The Governor stated that Nigeria does not just merely want banks to be banks but wants institutions that will contribute to the growth and transformation of the economy. Making references to the capitalisation exercise and its impact on the Financial Sector , Soludo said that in terms of capitalisation, the 25 banks that met the criteria Are equal to the top three banks in South Africa .

He said developments in the Sector have indeed been encouraging and there is still latitude for growth. He wondered why people Are concerned about banks going to the market to raise more Funds as Nigeria now Accounts for five of the top ten banks in Africa and is beginning to inch up.

“If we begin to look at market capitalisation over time, we will have the fastest growing banking Sector in Africa . And if you project the rate of growth in the next ten years, we will be there, probably over taking South Africa ,” Soludo predicted.