Omodele Adigun
The dust raised by the exit of the two global banks-HSBC and UBS- from Nigeria has refused to settle even almost two weeks after it became public knowledge.
What could have been regarded as its tip-off was hinted penultimate Thursday, November 1, by two envoys-the Consul General of the United States (US) High Commission in Nigeria, Mr John Bray, and the British Deputy High Commissioner to Nigeria, Laure Beaufils, when they said the ongoing face-off between MTN and the Central Bank of Nigeria (CBN) is an ominous cloud hanging like a tempest over the country’s investment climate and it’s scaring away big-players investors.
The CBN, in a report the next day, while lamenting that foreign investment had fallen sharply from a year ago, disclosed that an unknown hurricane has swept away HSBC and UBS offices from Nigeria. Since then, gales of controversy has been raging over what could have led to the hurried exit of these bulge-bracket firms, as they are called in investment banking, from our shores.
Two schools of thoughts, or conspiracy theories, have emerged to tutor the public on the remote and immediate causes of the rise and fall of these business empires in the country.
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Although, CBN did not give reasons, but one can deduce from its report that the two banks collapsed into the foreign direct investments’ crash to N379.84 billion ($1.2billion), in the first half of the year, from N532.63billion ($1.7 billion) a year earlier.
One of the spin doctors had even reasoned that the two banks were sent packing by the enforcement of Bank Verification Number (BVN) since they were not set up for regular banking
Hear him: “HSBC , British multinational banking and financial services holding company, and UBS, a Swiss multinational investment bank and financial services company, were never set up for regular banking. When I say regular banking I mean retail banking.
They never ran salary accounts; they were never set up to afford loans to customers etc.Their sole purpose was to help customers who can afford their services an easy way to transfer funds overseas.
Many do not know that since the inception of BVN which has made it easier for financial regulatory bodies to monitor outflow & inflow on every account, HSBC has been plotting their exit. If anyone can make their books public, you would find out they had more outflow than inflow.
“BVN was created February 2014 and then enforced by this government as from 2015. What did that do? Every account owner was forced to get a BVN code on their account (s).
So if law enforcement and financial regulatory bodies accuse you of fraud. With your BVN, they can tell which account(s) you have funds stashed. Any account without a BVN can no longer be run.
Movement of (illegal) huge sums especially overseas became a massive problem. So imagine a bank whose main source of revenue is moving funds overseas, suddenly can stay for months on end and the only customers you get are those who, maybe, want topay school fees overseas or medicals.
Won’t you close shop?
No more wires of $200,000 and above to Dubai to buy that exotic penthouse or carrying on with shopping sprees. No more bank instruments to private jet companies overseas.
“The importation of big boy toys; yachts, helicopters have reduced drastically. Now, once you try to initiate a huge wire transfer, CBN red flags that account and next thing you know is that compliance is calling the account officer to produce KYC(Know Your Customer).
Within minutes, SFU is doing a background check, thunder fire you if you are a civil servant or close to government. You would have to explain what the funds are for/how they were acquired and this drastically hit such banks like HSBC and UBS!”
Another, school of thought explained that the two foreign banks, HSBC in particular, have not been in good terms with the Nigerian government recently.
“Sometime in July, HSBC made a sort of political prognostication that a second term for the sitting President, Muhammadu Buhari, risked prolonging the economic quagmire of the country. It even said the President’s approval ratings sat near all-time lows. In a report by HSBC on Nigerian economy titled, ‘ Nigeria: Papering Over
The Cracks’, the global bank graphically painted the picture of a struggling and basket case economy of Nigeria whose consequence is a record-high unemployment and which, in turn, has given rise to an alarming number, 87 million, of poverty-stricken Nigerians.
“The government dismissed the report and labelled HSBC as one of the killers of Nigeria’s economy that aided the unbridled looting of Nigerian resources by corrupt leaders.
The Presidency asked the bank to return stolen assets allegedly stashed away in their vaults. HSBC and UBS might have revised their predictions, seen the possibility of a Buhari win in 2019 and so decided to sever business ties with Nigeria before what they see as an economic calamity is foisted on the nation.”
However, analysts have warned that the exit of the two firms from Nigeria will negatively affect the confidence of foreign investors to come to Nigeria.
“This is because when foreign financial institutions are operating in a country, it becomes easier for investors from their local environments to navigate and invest their resources in such a country.
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Also, they were of the opinion that this will negatively affect this administration’s rating in the ease-of-doing business rankings. That is why Mr Paul Ruwase, the President of the Lagos Chambers of Commerce and Industry ( LCCI), stated last week:
“We acknowledge the efforts of the government on the Ease of Doing Business in the country. The World Bank Doing Business 2019 Report showed a marginal drop in the ranking, from 145 to 146 for dear country. This underscores the need for more attention to be focused on the business environment issues.
We believe that solving the issues of Ease of Doing Business in Nigeria is a continuous one. To continually improve this ranking, the private sector must be empowered to create jobs and to reduce poverty.
We call for more credit to the private sector from banks and sustaining trajectory for initiation of special intervention with grants and low interest loans with longer tenor and moratorium. All we are wishing government to do is to create an enabling environment for us.” business people.”