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JP Morgan, 13 others to manage foreign reserves

Posted by By Oluyinka Akintunde on 2006/10/05 | Views: 674 |

JP Morgan, 13 others to manage foreign reserves

The Central Bank of Nigeria on Wednesday, named 14 foreign fund managers for the country’s external reserves and their partnering Nigerian banks.

The Central Bank of Nigeria on Wednesday, named 14 foreign fund managers for the country’s external reserves and their partnering Nigerian banks.

It also announced that the fund managers had been authorised to manage the CBN’s share of the foreign reserves, which is $7bn out of the total reserves of $38.07bn.

The CBN had traditionally kept the external reserves as deposits with foreign banks. This is the first time that it is appointing foreign asset managers to manage part of its reserves, in line with global best practice

The Head of Corporate Affairs, CBN, Mr. Festus Odoko, in a statement in Abuja, named the asset managers as: JP Morgan Chase; HSBC; Black Rock; BNP Paribas; UBS; Credit Suisse; Morgan Stanley, Fortis, Investec; ABN Amro; Cominvest; ING, Bank of New York and Crown Agents.

The Nigerian partners of the qualified external asset managers are: JP Morgan Chase (Zenith Bank Plc); HSBC (First Bank of Nigeria Plc); Black Rock (Union Bank of Nigeria Plc); BNP Paribas (Intercontinental Bank Plc); UBS (United Bank for Africa Plc); Credit Suisse (IBTC – Chartered Bank Plc); and Morgan Stanley (Guaranty Trust Bank Plc).

Others are Fortis (Bank PHB Plc); Investec (Fidelity Bank Plc); ABN Amro (Access Bank Plc); Cominvest (Oceanic Bank Plc); ING (Ecobank Plc); Bank of New York (Stanbic Bank Plc); and Crown Agents (Diamond Bank Plc).

Three other foreign institutions, namely: Barclays Bank (DCO); Deutsche Bank AG; and Pacific Investment Management Company were also appointed as external fund managers but were not awarded mandates because they did not have local partners.

All the foreign institutions, according to him, are reputable international asset managers with excellent track records and a minimum of ‘AA’ credit rating by international rating companies.

He said, “Indeed the volume of assets under their management ranges between $50bn and $1.6tn. 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 noted that the decision to appoint the external fund managers was taken by the Investment Committee of the CBN at its meeting on Tuesday, October 3, 2006.

The CBN spokesman added, “The Investment Committee appointed external fund managers for our foreign reserves in order 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.

“As a first step, the Investment Committee decided to award mandates for $7bn out of the total external reserves. The $7bn is awarded to 14 out of 17 reputable Global Asset Managers which not only met the CBN’s requirements for appointment as external assets managers, but also formed partnership ties with Nigerian banks.”

Odoko said the CBN had increased the deposit limits of all Nigerian banks, which have branches in Organisation for Economic Cooperation and Development countries, by $50m each.

He added, “The CBN decided to redeem the promise made to reward the first and the largest groups of banks to consolidate. UBA Group was the first to consolidate while Unity Bank comprises the largest number of banks.

“The committee therefore awarded deposit placements of $50m to each of them. The deposits shall be given to their foreign branches or reputable foreign partners.”

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