The Central Bank of Nigeria (CBN) has said it remains positive on its earlier stated June deadline for the release of names of primary mortgage banks (PMBs) which were able to cross the recapitalisation hurdle.
The apex bank which gave this assurance during a meeting with some mortgage operators in Abuja recently, said that it has not changed its mind on June, stressing that the names of all the successful PMBs would be in public domain by the end of the month.
Expectation was high last December on the conclusion of the recapitalisation exercise which produced seven PMBs that are to operate at national level with N5 billion capital base and 33 other PMBs that are to operate at regional level having been able to recapitalise to a minimum of N2.5 billion.
A source integral to the recapitalisation exercise disclosed to BusinessDay that the slight delay in releasing the names of the successful PMBs was because CBN wants to ensure that it comes with a seamless result of the exercise.
“This exercise has human element and so, you can’t rule out some grey areas that needed to be straightened out; added to this is that it is possible there are a couple of banks that are on the border-line and are being given sometime to shape up; I think it is important to do this so that once the names are out, we won’t have any reason to go back to them”, the source explained.
In the revised operational guidelines for the PMBs which the apex bank released early last year, the mortgage banks were required to raise their share capital from N100 million to N2.5 billion and N5 billion for regional and national operations, respectively. And under the non-permissible aspect of the guidelines, the banks were also required to divest from their non-core mortgage banking interests.
The exercise, which was concluded on December 31, 2013, slashed the number of the PMBs by a little above 50 percent to 40 PMBs down from 83 and according to Femi Johnson, the president of Mortgage Banking Association of Nigeria (MBAN), none of those that could not cross the recapitalisation huddle would go out of business.
“Today, we have 83 mortgage banks. I expect that at the end of the day, at least half of them will remain in business. When I say half of them, it doesn’t mean that others will not be in business anymore; it is just that the number will shrink by way of business combination. A lot of people are talking to one another and you find situations where three are talking of merger and in some cases, five to six are also discussing.
Some others are talking about acquisition and so at the end of the day, the number will drop but that does not mean some banks will fizzle out of business”, Johnson noted.
In a related development, the Nigerian Mortgage Refinance Company (NMRC) which was billed to start refinancing mortgages to be originated by the PMBs and other mortgage institutions is targeting third quarter of this year, precisely July, to start full operation.
At the launch of the mortgage refinance company in Abuja early this year, Ngozi Okonjo Iweala, the minister of finance, stated that, even though the company had been launched, citizens could only begin to access mortgages from June this year.
Taking-off with N6 billion capital NMRC is expected to be floating bonds in the capital market to raise additional finance for its operations later in the year and, according to the finance minister, $250 million out of the $300 million soft International Development Association (IDA) loan approved by the World Bank for the company would be disbursed to it by installments as tier 2 capital.
