Banking

LAGOS (Capital Markets in Africa) — It’s not just the pandemic that’s putting Nigerian bank earnings at risk: Competition for customers in the recession-hit economy is driving interest rates on loans lower. Mid-tier lender FCMB Group Plc is forecasting that first-quarter earnings will fall more than 20% as rates decline, pushing the Lagos-based bank to accelerate lending to compensate for the profit squeeze. Guaranty Trust Bank Plc, Nigeria’s biggest bank by market value, reported flat interest income for the…

LONDON (Capital Markets in Africa) — Global central banks are embarking on fresh waves of bond-buying to fight the fallout from the pandemic, despite mounting claims that the once-mighty policy is losing its power to boost the economy. The U.S. Federal Reserve, Bank of England, Bank of Japan and the European Central Bank have splurged $5.6 trillion this year alone on quantitative easing, according to Bloomberg Economics. The ECB is expected to increase its own purchase plans by…

LAGOS (Capital Markets in Africa) — African nations should tap more domestic savings for their funding needs and develop their own financial markets to avoid the complications and “bias” that comes with raising international debt. That’s according to Agence Française de Developpement Chief Executive Officer Remy Rioux, who is urging sovereign borrowers to turn to long-term, concessional financing rather than rely on short-term, expensive credit from private institutions. Part of the risk premium attached to African…

LAGOS (Capital Markets in Africa) — The global migration away from the London interbank offered rate hit a critical juncture Friday, with a new legal protocol opening the way for a wider adoption of alternative benchmarks. The International Swaps and Derivatives Association, or ISDA, unveiled standardized contractual language, which will allow firms that haven’t fully prepared for Libor’s exit to incorporate transition clauses into their agreements. Lawyers say the move by the trade group that oversees the global…

NEW YORK(Capital Markets in Africa) — U.S. banks are taking too narrow of an approach when disclosing their exposure to climate risk and are potentially underestimating possible losses, according to a report released Monday. Bank disclosures tend to focus on direct loans to the fossil-fuel sector or the electricity industry, but their exposure is much broader, Ceres, a non-profit organization focused on sustainability, said in its report. More than half of banks’ syndicated-lending portfolios carry…

ADDIS ABABA (Capital Markets in Africa) — Ethiopia’s effort to stamp out counterfeiting by introducing new currency notes is pulling people who’ve never had a bank account into the financial system. At least 1.3 million previously unbanked Ethiopians have handed in their two-decade-old banknotes over the past month since the demonetization process was started, Prime Minister Abiy Ahmed told lawmakers on Monday. In exchange, they were given a bank account from which they can draw…

LAGOS (Capital Markets in Africa) — The head of Nigeria’s state oil company expressed confidence that the nation’s long-delayed oil and gas industry reforms will be passed by Parliament. The Petroleum Industry Bill, legislation that has been two decades in the making, seeks to overhaul the laws that govern the West African nation’s oil industry, reforming how it’s operated and funded. The legal framework hasn’t kept up with the country’s needs, Mele Kyari, group managing director of…