VZCZCXRO3453
PP RUEHMA RUEHPA
DE RUEHUJA #2180/01 3100959
ZNR UUUUU ZZH
P 050959Z NOV 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 4369
INFO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHOS/AMCONSUL LAGOS 0210
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 ABUJA 002180 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT PASS TO USTR FOR AGAMA AND EXIM FOR JANIK, MILIAN AND 
JACKSON 
TREASURY FOR PETERS, RHALL 
DOC FOR 3317/ITA/OA/KBURRESS 
DOC FOR 3130/USFC/OIO/ANESA/DHARRIS 
 
E.O. 12958: N/A 
TAGS: EFIN ETRD ECON EINV PGOV NI
SUBJECT: NIGERIA: EX-IM HEARS POSITIVES ON FINANCIAL MARKET 
 
REF: Lagos 426 
 Abuja 2122 
 
¶1. (SBU) Summary.  Nigerian bank regulators are confident that the 
current global financial crises will have little effect on the local 
financial system.  They state that the current decline in market 
capitalization is a market correction and are taking measures to 
ensure that the correction does not become a crisis.  Their optimism 
may lead to delays in taking corrective action if they are mistaken. 
 End Summary. 
¶2. (SBU) On October 20, U.S. Export-Import Bank officials Katherine 
Janik, Mauricio Milian, and Kyle Jackson, and EconOff and EconSpec 
met with Nigerian financial system regulators for a briefing on  the 
current market environment and effects the global financial crisis 
may have on the local financial system.  EXIM met with Nigerian 
Securities and Exchange Commission (SEC), Nigerian Deposit Insurance 
Corporation (NDIC) and Central Bank of Nigeria (CBN) officials in 
Abuja.  EXIM interest in the Nigerian financial market is high 
because EXIM offers a range of financing solutions for U.S. 
exporters and Nigerian buyers to expand trade between the United 
States and Nigeria. 
Securities and Exchange Commission 
---------------------------------- 
 
¶3. (SBU) SEC Director General Musa Al-Faki claimed that the recent 
capital market downturn is a natural market correction and is not 
linked to the current global financial crisis.  Since February 2008, 
market capitalization declined from 12 trillion naira ($102 billion) 
to nine trillion naira ($76 billion) by the end of October 2008. 
The SEC DG asserted the current downturn led to excessive panic 
among the public which resulted in selling and falling stock prices. 
 
 
¶4. (SBU) Al-Faki reported that measures have been taken to curb the 
current downturn, such as the recent approval for a share buy back 
by publicly traded companies, a 50 percent reduction in transaction 
fees, and the introduction of regulations for licensing market 
makers.  The SEC is also working with the Nigerian Stock Exchange 
and other market participants to educate the public on the capital 
market and the nature of various instruments traded.  The SEC hopes 
that with such measures market confidence will be regained. 
 
Nigerian Deposit Insurance Corporation 
-------------------------------------- 
 
¶5. (SBU) NDIC Managing Director and Chief Executive Officer Ganiyu 
Ogunleye said that the current global financial crisis has had no 
effect on the Nigerian financial system.  He stated that the NDIC 
and CBN are collaborating to ensure that banks are adequately 
supervised because they are exposed to risks in the market and 
account for 65 percent of total market capitalization.  Ogunleye 
confirmed that the CBN is taking proactive measures, such as 
granting regulatory forbearance for banks up to December 2009 to 
restructure their margin facilities. 
 
¶6. (SBU) Ogunleye expressed concern about banks' ability to sustain 
growth without focusing on training personnel and stressed the need 
for capacity building in the banking sector.  Some banks have fully 
functional training schools and programs for their employees, while 
others prefer to attract already trained workers from other banks. 
He advised that such a strategy is not sustainable in the long run 
and due to rapid growth in the banking system banks are having 
difficulties employing knowledgeable employees. 
 
Central Bank 
------------ 
 
¶7. (SBU) CBN Deputy Director of Banking Supervision Charles Akoroda 
said that the current global financial crisis has not had any effect 
on Nigerian banks, and banks' liquidity positions remain very 
strong.  The CBN continues to monitor liquidity and deposit trends 
on a daily basis.  In addition, he informed the delegation that the 
market is forcing a possible bank merger which will reduce number of 
banks to 23. (Comment: Merger could be between PHB and Spring Bank. 
End Comment.) 
 
¶8. (SBU) Akoroda opined that the banking system has grown 
"remarkably" since consolidation in 2005, and banks are expanding 
their operations locally and abroad.  He said an area of potential 
improvement is better supervision and starting in 2009 the CBN will 
place CBN examiners in all banks to monitor daily bank activities, 
thereby no longer relying on bank drafted reports. 
 
 
ABUJA 00002180  002 OF 002 
 
 
Comment 
------- 
 
¶9. (SBU) Nigerian financial market regulators are in agreement that 
the current global financial crises will have little to no effect on 
the local financial system.  They dismiss the steep drop in the 
stock exchange as only a market correction and not a symptom of 
larger problems.  Sector experts are skeptical of financial reports 
and the existing loopholes in reporting call into question how true 
bank reports are and whether they accurately demonstrate banks' 
financial health.  These concerns are a potential area of trouble. 
Banking sectors experts have told us separately that foreign 
investors have pulled all their equity holdings from the Nigerian 
stock market, not out of concern about economic and financial 
conditions in Nigeria, but because they needed the funds back in 
home markets. 
 
¶10.  (U) This message was coordinated with ConGen Lagos. EXIM 
visitors did not have an opportunity to clear this message before 
departure. 
 
SANDERS