Stanbic IBTC Bank Plc, a unit of Standard Bank Group Ltd., won approval from Nigeria’s central bank to provide Islamic banking services in Africa’s most populous nation, Deputy Governor Kingsley Moghalu said.
A preliminary license was awarded to Stanbic last week for a Shariah-compliant banking window, the first one given to a commercial bank in Nigeria, Moghalu said in an interview in South Africa’s capital, Pretoria, on July 1. Islam bans paying and receiving interest.
Nigeria’s 150 million population is divided almost evenly between Muslims and Christians, providing it with a market for Islamic banking products. Central bank Governor Lamido Sanusi said on June 20 Nigeria wants to be a “hub of Islamic finance” in the region and plans to sell its first Islamic bond, known as sukuk, within 18 months.
“We know a number of other banks are interested in applying for non-interest banking windows,” Moghalu said. “We are preparing our officials to be able to regulate that space, and a lot of training is taking place in that context.”
Stanbic spokesman Bimbo Ashiru couldn’t immediately comment when called in Lagos today.
The central bank has given approval to Jaiz International Bank Plc, a local lender with international investors, to open the country’s first Shariah-compliant bank, Moghalu said. Stanbic has a license to begin operating Islamic banking branches within six months and if it fails to do so within that time, the lender will need to reapply for approval, he said.
London-based Standard Charted Plc indicated to the central bank it’s interested in seeking a license to provide Shariah-compliant banking services, Sanusi told reporters in Nigeria’s capital, Abuja, today.
Islamic banking “has significant potential but it’s subject to the risks that go with every other type of banking activity,” the deputy governor said.
Nigeria is trying to stabilize its banking industry after a debt crisis in 2009 almost led to its collapse. Sanusi fired the chief executive officers of eight lenders, pumped 620 billion naira ($4.1 billion) into ailing banks and created a state-owned company to buy bad debts.
The central bank has faced criticism from Christian groups that the introduction of Islamic banking may fan religious tension. Cosmas Ilechukwu, chairman of the Christian Association of Nigeria in Imo state, said Sanusi, a Muslim who studied Islamic law, is trying to promote his religion under the guise of banking reform, Vanguard newspaper reported on July 1.
“This is a financial product,” Moghalu said. “It’s got nothing to do with religion.”
Johannesburg-based Standard Bank is Africa’s biggest lender.