BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

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Categorized | Banks

Ecobank board to discuss chairman’s fate

Posted on July 31, 2013

Clients queue outside before the opening of a branch of the Ecobank in Abidjan©AFP

The divided board of the African bank that pioneered cross-border expansion on the continent is to meet next week to determine the fate of its chairman, as Nigerian regulators broaden inquiries into debts linked to his business interests.

The Securities and Exchange Commission (SEC) in Lagos, which had a central role in sanitising Nigeria’s financial system following the 2009 bank and stock market crash, has summoned the board of Ecobank Transnational (ETI), the bank has confirmed.

    The ETI board is scheduled to meet separately on Monday in a special session to address the position of its chairman Kolapo Lawson. Board members will also raise the question of how Thierry Tanoh, chief executive, handled issues surrounding the debts, said people familiar with the matter.

    Ecobank has been in the vanguard of African banks, championing regional integration to establish a presence in 33 African countries with assets worth $20.6bn. Mr Tanoh was recruited a year ago from the International Finance Corporation, the World Bank’s private sector lending arm, with a brief to consolidate these gains.

    He is under fire from some shareholders, including South Africa’s Public Investment Corporation, the largest, for allegedly failing to keep the ETI board adequately informed about an April letter from the Central Bank of Nigeria (CBN) questioning Mr Lawson’s fitness as chairman. In the letter, the CBN’s director of banking supervision wrote of “huge outstanding non-performing facilities against” the chairman and owed to the Asset Management Corporation of Nigeria, which was set up to absorb non-performing assets following the 2009 Nigerian bank crash.

    Mr Lawson said he is “in constructive negotiations with Amcon for a final settlement”.

    ETI said an “outstanding amount” – N1.6bn ($10m) – owed to its Nigerian subsidiary by a family real estate company also chaired by Mr Lawson was cleared last week.

    Analysts pointed out, however, that the sums were insignificant in the context of the bank’s balance sheet. Ecobank’s half-year results released on Monday showed pre-tax profits of $200m, up 58 per cent, with return on equity up 15.3 per cent from 11.5 per cent in the prior year.

    But PIC and some other shareholders have insisted that the matter raises “corporate governance” issues that need addressing at board level.

    There are also broader ramifications for Nigeria’s regulators, who are pressing to institutionalise reforms after the 2009 crash exposed a nexus of elite business and political interests with billions of dollars in non-performing loans.

    The matter has become a test of cross-border supervision in Africa as banks hunt for growth across jurisdictions. The CBN does not regulate ETI, which is headquartered in Togo and falls under the purview of the west African banking commission.

    But a senior banking official said the CBN has written to the commission, based in Abidjan, to inform it that under Nigerian regulation Mr Lawson would have been asked to stand down as a result of the longstanding liabilities to which he is linked.

    The commission did not respond to requests for comment.