Nigerian Banks May Leave Gambia
By Own Correspondent – ThisDay – Nigerian banks may be compelled to stop operations in The Gambia as opportunities and revenue thin down, exacerbated by rising competition and negative impact of the global meltdown.
At the end of the 2009 financial year, the country’s banking industry comprising 13 banks recorded total loss of about 45 million Dalasis (about $1.5million).
Ten of the banks declared losses as against three banks with the bottom-line on the positive territory. Managing Director of Guaranty Trust Bank Gambia, Mr Lekan Sanusi, told journalists in The Gambia last weekend that the country could only take a certain number of banks.
He said: “But do we really need as much as 14 banks in a relatively small country like The Gambia? If you divide the number of banks in this country by the population of about 1.7 million, you have an average of 100,000 people per bank. Revenue is going down. What I know is that in the long run, people will count their numbers.
“If you can’t achieve a return on investment in a bank subsidiary in The Gambia as is expected, then the money will return to the home country. At the end of the day, it is return on investment that matters and shareholders will have to ask the bank in Nigeria, why must we continue to lose money in The Gambia?”
The Central Bank of The Gambia, worried that if it continues to declare losses, the banks might lose the confidence of the people, has advised banks to streamline their cost. The apex financial institution has also announced new capital base for banks. It has also directed banks to increase their minimum equity capital from the current D60 million (about $2 million) to D150 million next year (about $5 million) and to D200 million (about $7 million) by 2012.
The GTBank Gambia boss, who addressed journalists at the Annual Course for Reporters organised by GTBank Nigeria and which ended in that country yesterday, said the new capital base had increased the challenges of banks operating in that country. He stressed that only the creative financial institutions were likely to survive the industry competition and deliver returns commensurate to the expanded capital base. He disclosed that GTBank Gambia had always taken the first mover advantage in product development and market penetration, which according to him, explained why the bank was the only one in the Gambian banking industry that recorded positive growth in profit before tax in 2009.
A review of the financials of GTBank Gambia showed that the bank was equally affected by the downturn in that country but the management was able to sustain the bank’s financials on the positive territory.
The profit position of GTBank Gambia grew by only D10 million from D60 million to D70 million between 2007 and 2008 and from 2008 to 2009, it increased by D5 million to D75 million. That is against the 100 per cent increase in profit from D14 million to D29 million between 2005 and 2006 as well as equally 100 per cent growth in profit from D29 million to D60 million between 2006 to 2007. A number of Nigerian banks are operating in The Gambia including GTBank, Oceanic Bank, Access Bank, FinBank and BankPHB.
