Nigeria Banks at Risk From Corporate Governance Issues, S&P Says

Nigerian bank ratings are threatened by corporate governance issues and rapid loan growth as competition increases credit risk, said Standard & Poor’s.

“We see a risk that the momentum behind regulatory improvements may slow after leadership changes at the central bank this year,” Samira Mensah, a Johannesburg-based credit analyst at S&P, said in a statement today. “The future growth and stability of the Nigerian banking sector will largely depend on a cohesive regulatory framework, together with political and institutional stability.”

Central Bank of Nigeria Governor Lamido Sanusi, 52, will step down when his contract ends in June and he said last month his successor’s main challenge will be to maintain the regulator’s independence. During his five-year term, he fired bank executives to clean up an industry that was near collapse.

Nigerian economy is projected to grow 6.5 percent this year and stable inflation in Africa’s biggest oil producer will support loan growth of as much as 30 percent in 2014, S&P said.

Fitch Ratings said on Jan. 31 that pan-African banking companies face regulatory risks after the Nigerian Securities and Exchange Commission criticized Ecobank Transnational Inc. (ETI) for failing to address governance issues amid allegations of executive fraud and misconduct.

To contact the reporter on this story: Chris Kay in Lagos at ckay5@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.