Identifier
Created
Classification
Origin
05LAGOS1892
2005-12-15 10:18:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Lagos
Cable title:
NIGERIA: RECAPITALIZATION OF MORTGAGE FINANCE
how-toThis record is a partial extract of the original cable. The full text of the original cable is not available. 151018Z Dec 05
UNCLAS LAGOS 001892
SIPDIS
DEPT PASS TO USTR
SENSITIVE
E.O. 12958: N/A
TAGS: EFIN ECIN NI
SUBJECT: NIGERIA: RECAPITALIZATION OF MORTGAGE FINANCE
INSTITUTIONS IMMINENT
UNCLAS LAGOS 001892
SIPDIS
DEPT PASS TO USTR
SENSITIVE
E.O. 12958: N/A
TAGS: EFIN ECIN NI
SUBJECT: NIGERIA: RECAPITALIZATION OF MORTGAGE FINANCE
INSTITUTIONS IMMINENT
1. (U) Summary: Nigeria's ninety-plus primary mortgage
institutions (PMIs) may soon be required to recapitalize in
line with the ongoing reforms in the financial sector. In
anticipation of a directive from the Central Bank (CBN),
mortgagors are striving to raise their capital base from the
currently required naira 100 million (USD 769,231) to naira
one billion (USD 7.7 million). However, many expect the CBN
to give a much higher capital requirement, perhaps naira
five billion (USD 38.5 million). End summary.
2. (U) To further reform the financial sector, the CBN is
expected to raise the capital requirement of PMIs from naira
100 million (USD 769,231) to roughly naira five billion (USD
38.5 million). Last year, the CBN directed all banks to
recapitalize to naira 25 billion (USD 192 million) by
December 2005. Mortgage operators believe the CBN may
announce sector reform in early 2006. According to FBN
Mortgage Bank officials, in a move intended to preempt even
more stringent CBN measures, Nigerian PMIs under the aegis
of the Mortgage Banking Association of Nigeria have proposed
to raise their individual capitalization to naira one
billion (USD 7.7 million) in two tranches; naira 500 million
(USD 3.8 million) by end of 2006, and naira one billion by
July 2008.
3. (SBU) FBN executives told us they expect few of Nigeria's
90 PMIs to survive a reform process, given that most are
already moribund. They said industry leaders; Union Homes,
Finacorp Savings and Loans, Cooperative Development Savings
and Loans, Aso Savings and Loans, and FBN Mortgage Bankers,
can easily recapitalize when directed to do so. However,
PMI's should expect keener competition from banks as banks
failing to meet the naira 25 billion recapitalization
requirement may opt to become PMIs instead. In a move that
further signals the trend of consolidation in the financial
sector, some banks are in the process of acquiring ailing
PMIs, the same FBN executives said.
Browne
SIPDIS
DEPT PASS TO USTR
SENSITIVE
E.O. 12958: N/A
TAGS: EFIN ECIN NI
SUBJECT: NIGERIA: RECAPITALIZATION OF MORTGAGE FINANCE
INSTITUTIONS IMMINENT
1. (U) Summary: Nigeria's ninety-plus primary mortgage
institutions (PMIs) may soon be required to recapitalize in
line with the ongoing reforms in the financial sector. In
anticipation of a directive from the Central Bank (CBN),
mortgagors are striving to raise their capital base from the
currently required naira 100 million (USD 769,231) to naira
one billion (USD 7.7 million). However, many expect the CBN
to give a much higher capital requirement, perhaps naira
five billion (USD 38.5 million). End summary.
2. (U) To further reform the financial sector, the CBN is
expected to raise the capital requirement of PMIs from naira
100 million (USD 769,231) to roughly naira five billion (USD
38.5 million). Last year, the CBN directed all banks to
recapitalize to naira 25 billion (USD 192 million) by
December 2005. Mortgage operators believe the CBN may
announce sector reform in early 2006. According to FBN
Mortgage Bank officials, in a move intended to preempt even
more stringent CBN measures, Nigerian PMIs under the aegis
of the Mortgage Banking Association of Nigeria have proposed
to raise their individual capitalization to naira one
billion (USD 7.7 million) in two tranches; naira 500 million
(USD 3.8 million) by end of 2006, and naira one billion by
July 2008.
3. (SBU) FBN executives told us they expect few of Nigeria's
90 PMIs to survive a reform process, given that most are
already moribund. They said industry leaders; Union Homes,
Finacorp Savings and Loans, Cooperative Development Savings
and Loans, Aso Savings and Loans, and FBN Mortgage Bankers,
can easily recapitalize when directed to do so. However,
PMI's should expect keener competition from banks as banks
failing to meet the naira 25 billion recapitalization
requirement may opt to become PMIs instead. In a move that
further signals the trend of consolidation in the financial
sector, some banks are in the process of acquiring ailing
PMIs, the same FBN executives said.
Browne