The Central Bank of Nigeria (CBN) disclosed yesterday it has apportioned $7bn out of the nation’s external reserves, which stood at $38.07 bn as at the end of July, to 14 global asset managers and their 14 Nigerian banks local partners, to manage.
The amount bequeathed to the asset managers represents 18.39 per cent of the total external reserves, which was hitherto kept with foreign banks.
The 14 global asset managers and their local counterparts were Black Rock and Union Bank of Nigeria Plc; J.P. Morgan Chase and Zenith Bank Plc; H.S.B.C and; First Bank of Nigeria Plc; BNP Paribas and Intercontinental Bank Plc; UBS and United Bank for Africa Plc; Credit Suisse and IBTC Chartered Bank Plc; Morgan Stanley and Guaranty Trust Bank Plc; Fortis and Bank PHB Plc; Investec and Fidelity Bank Plc; ABN Amro and Access Bank Plc; Cominvest and Oceanic Bank Plc; ING and Ecobank Plc; Bank of New York and Stanbic Bank Plc and; Crown Agents and Diamond Bank Plc.
THISDAY check revealed that CBN gave each asset manager, $500m of the external reserves to manage.
The apex bank also made good its pledge of July 6, 2004 (when the consolidation of the banking industry was announced), to reward the first bank to consolidate and the one with the largest number of merging banks as it made a deposit placement of $50m each in United Bank for Africa Plc and Unity Bank Plc.
Making the disclosure yesterday in Abuja, CBN’s Head, Corporate Affairs, Mr. Festus Odoko said the decision to entrust such portion of the reserves to the 14 global asset managers’ and Nigerian banks out of the 17 that applied was reached at the meeting of Investment Committee of the CBN last Tuesday, October 3.
He said the three other foreign institutions, namely; 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 him, “the Investment Committee of the Central Bank of Nigeria (CBN) at its meeting of 3rd October, 2006 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.
“The CBN has traditionally kept the external reserves as deposits with foreign banks. This is the first time that it is 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 $7bn out of the CBN portion of the total external reserves. The $7 bn 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 for partnership ties with Nigerian banks.”
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Odoko explained the Investment Committee had selected the 14 global asset managers based on the fact that, “all the foreign institutions are reputable international asset managers with excellent track records each with a minimum credit rating of ‘AA’ rating by international rating companies”, and also that, “except for Crown Agents, each of the selected Asset Managers has Asset under management in excess of $50bn – indeed the volume of assets under their management ranges between US $50bn and US $1.6 trillion.”
Similarly, the apex bank revealed that “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.”
Noting “effective take off of each mandate is contingent on the strength of the partnership between the local banks and their foreign partner”, Odoko said it would be sending specific suggestions to each group to enable them strengthen their partnerships
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