Key Finance Updates
11 Plc to acquire Lagos Continental Hotel from AMCON
1 Plc, formerly Mobil Oil Nigeria Plc, has finalized discussions with the Asset Management Company of Nigeria (AMCON) to acquire the Lagos Continental Hotel, according to a statement released last month. The company said it has notified its shareholders, stakeholders, the Nigerian Stock Exchange (NSE) as well as the general public about the acquisition, which is subject to the terms and conditions agreed between the parties.
The 5-star Lagos Continental Hotel, formerly known as InterContinental Hotel Lagos, was open for business in September 2013. It was deflagged in January 2018 and rebranded to Lagos Continental Hotel following the exit of United Kingdom-based Milan Group, which previously owned the property. The hotel subsequently went into receivership following a court order that allowed now-defunct Skye Bank to take over the property, over debts of $29.8 million and N3.8 billion owed to the bank.
In a statement signed by Adetunji Oyebanji, Managing Director/CEO of 11 Plc, the company said it plans to partner with a major international brand to provide world-class hospitality services. The company also said the property will require significant investment to raise its standards to the levels that are consistent with similar facilities in major cities around the world.
Report identifies five main challenges African banks face
Anew report by Mauritius Commercial Bank (MCB), a major African financial institution with 181-year history, has identified the five major risks that African banks face as lack of technical expertise amid increased cybersecurity risk; KYC issues hampering financial inclusion; talent management, retention and development; customers' education and staff skills gap; and expertise in IT & digitalisation programme.
Elaborating on the main threat posed by cybersecurity, MCB Group CEO, Pierre-Guy Noël, observed: “…there is a lack of appropriate risk assessment and framework that caters for the exigencies arising from the use and adoption of new digital solutions.”
He also elaborated that the lack of KYC and other compliance frameworks to facilitate the on-boarding of unbanked segments remain a key obstacle for African banks to further financial inclusion. He stressed the challenge of developing solutions for customer segments that are distinct and sometimes unrelated, like rural unbanked segments requiring traditional supports and channels distinct from urban customers with high digital literacy.
IMF reaches Staff-Level Agreement on $2.9 billion lending programme for Ethiopia
Following the policy discussions with Ethiopia by a team of IMF staff from October to November 2019, the Washington-based international financial institutions has announced it has reached staff-level agreement for a financing package of $2.9 billion for the African country. The financing program is likely to be supported under IMF’s Extended Credit Facility (ECF) and Extended Fund Facility (EFF).
In a statement signed by Sonali JainChandra, IMF staff lead on the consultations, the lending will deliver on five main pillars: durably address the foreign exchange shortage and transition to a more flexible exchange rate regime; strengthen oversight and management of state-owned enterprises to contain debt vulnerabilities; strengthen domestic revenue mobilization and expenditure efficiency to create space for adequate poverty-reducing and essential infrastructure spending; reform the financial sector to support private investment and modernize the monetary policy framework; and strengthen the supervisory framework and financial safety nets.
The statement said that the overall objective of the programme would be to support implementation of Ethiopia’s Homegrown Economic Reform Programme.
In spite of Ethiopia’s impressive GDP growth of recent years and political stability, the country has been facing an acute foreign exchange shortage amid other macroeconomic challenges, including double digit inflation rates.
US, Chinese banks dominate top 25 global banks by market capitalization
US and Chinese banks dominated the top ten ranking of the largest 25 global banks by market capitalisation in Q3, 2019, according to data compiled in US dollar by Globaldata. JPMorgan, with a market cap. of $376.3 billion, Bank of America ($271.5 billion), Wells Fargo ($222.2 billion) and Citigroup ($156.1 billion) were the leading US banks that made top 10 ranking.
The Chinese banks with similar ranking are ICBC ($276.2 billion), China Construction Bank ($244.9 billion), Agricultural Bank of China ($169.7 billion), Bank of China ($147.7 billion), and China Merchants Bank ($122.8 billion).
UK’s HSBC was the only non-US and nonChinese banks in the top ranking with market capitalisation of ($155.7 billion).
In Q3 2019, the aggregate market cap. of the top 25 banks was down by 3.3 per cent to $3.4 trillion from $3.5 trillion in Q2 2019. All the Chinese banks’ market cap. fell during the quarter, the first time since 2008 yuan depreciated and breached seven per US dollar mark, which is seen by many as China’s counter to the US’s threat to inflict 10 per cent tariffs on about $300 billion worth of Chinese imports, which are not already part of any levies.
Among gainers, growth was rather subdued except Canadian multinational bank, Scotiabank, which was the only player that witnessed market capitalisation growth of more than 10 per cent as its third quarter results were better than estimates on account of another quarter with double-digit growth in international banking division.