Posted by By ISAAC ANUMIHE, Abuja on
Central Bank of Nigeria (CBN) on Wednesday named 14 foreign banks, with their local partners, which would manage $7 billion of Nigeria's external reserves.
Central Bank of Nigeria (CBN) on Wednesday named 14 foreign banks, with their local partners, which would manage $7 billion of Nigeria's external reserves.
The 14 banks include Black Rock, with Union Bank Plc as local partner, J. P Morgan Chase (Zenith Bank); HSBC (First Bank of Nigeria Plc,) BNP Paribas (Intercontinental Bank Plc;) Credit Suisse (IBTC-Chartered); Morgan Stanley (Guaranty Trust Bank); Fortis (Bank PHB); Investec (Fidelity Bank Plc) and ABN Arnro (Access Bank).
Others are Commvest, whose local partner is Oceanic Bank; ING (Ecobank); Bank of New York (Stanbic Bank) and Crown Agents (Diamond Bank Plc)
In a statement on Wednesday, Head, Corporate Affairs of the CBN, Mr Festus Odoko, said that the investment committee of the apex bank appointed the external fund managers to allow for professional management, diversification of investment and to leverage on the expertise of the foreign banks to transform Nigerian banks into global financial institutions.
He stated the CBN has traditionally kept the external reserves as deposits with foreign banks, saying that this is the first time CBN was appointing foreign assets managers to manage part of its reserves, in line with global best practice.
"As a first step, the investment committee decided to award mandates for $7 billion out of the CBN portion of the total external reserves. The $7 billion is awarded to 14 out of 17 reputable global asset managers which not only met CBN's requirements for appointment as external assets managers, but also for partnership ties with Nigerian banks.
He, however, noted that Barclays Bank (DCO), Deutsche Bank AG and Pacific Investment Management Company (PIMCO) were technically qualified but could not be awarded mandates because they did not have local partners.
According to Odoko, among other considerations of the committee are that all the foreign institutions are reputable international asset managers with excellent track records, each with a minimum credit rating of ‘AA' by international rating companies. Except for Crown Agents, each of the selected asset managers has asset under management in excess of $50 billion. The volume of assets under their management ranges between $50 billion and $1.6 trillion.
Also, in determining the amount of the mandate to each asset manager, consideration was given to the size of the shareholders' funds of its local partner. "The effective take-off of each mandate is contingent on the strength of the partnership between the local banks and their foreign partners. The CBN would be sending specific suggestions to each group to enable them strengthen their partnerships," he said.
Furthermore, the CBN spokesman said the investment committee was satisfied with the performance of the Nigerian banks which have branches in OECD countries, which have been beneficiaries of small portions of the CBN's reserves as deposits.