The Sun News Online

As the ongoing global financial crisis continues hitting various economies across the would like a tornado, there is a growing concern in some circles that except something was done urgently, Nigerian banks’ investment outside the country may soon be affected.

In any way it is viewed, some observers believe there is a real threat to the security of offshore banking exploits as various authorities take steps to hedge against violent swings in most of the world market.

Government’s intervention has become necessary considering the effort that several nations have taken so far to stem the tide of event, if only to safe guard millions of jobs across the world which would be lost in the event of a total collapse of the financial system.

The collapse of the Leyman Brothers, Merrill Lynch and Washington Mutual in the United States of America no doubt has left its wake millions of casualties among depositors and other stakeholders who had one thing or the other to do with the dead institutions.

That was why US, President George W. Bush when he impressed on the lawmakers, the need to approve the $700billion rescue package for the ailing economy, pointing out that except the initiative was endorsed, American families and citizens would soon be confronted with harsh realities of the development which may include, unemployment, a higher degree of insolvency and other socio economic crisis that may too difficult to manage eventually.

However, as a fallout to the financial sector crises in Europe and America, governments and regulators in these jurisdictions are already taken steps to safeguard their institutions from the consequences of the unfolding meltdown.

Early this week for instance, Germany, France and Italy among others announced a bailout plan for their various institutions enmeshed in the turbulent financial crisis, having realized that the financial sector in any economy holds the key to the success of other sector of the economy.
Perhaps only the British Government has come out to openly say it may not use tax payers’ money to bail out any institution that slips into crisis.

Gordon Brown’s government argument would always hold water considering the strictness of the British financial sector regulatory framework, compared to the situation in America or other European states where regulation is more lax, which also says so much about the Nigerian financial sector.
From all indications, there seem to be no end in sight to the crisis that is threatening the global landscape, particularly as various governments are busy appraising the impact of the problem on their economy.
For many, the reasons for this line of thought is hinged on the fact that the Central Bank of Nigeria had just taken the sector through a round of reform which many believe has given the banking industry a global identity.

It is against this background that experts have made a passionate call for urgent measures to be adopted by the authorities to protect Nigerian banks investments outside the shores of the nation.
It is on record however that since the end of that reform process, Nigerian banks have continued to make in-roads across Africa, Europe and America, and have consistently grown in ranking on the continental and global level.

Furthermore, there are of course very strong indications to believe that not many Nigerians would deny the fact that the banking sector has recorded phenomenal progress in their various areas of operation. But of great concern to some at the moment is the fear that those gains may not be sustained anymore in the face of the severe tension in the global financial market
.At the last count no fewer than 10 banks are acquiring banking licenses and setting up branches in various countries in Africa, Europe and America.

The list of Nigerian banking institutions that have successfully done so include, Guaranty Trust Bank, Zenith Bank, United Bank, Union Bank, First Bank, and Intercontinental Bank, and Oceanic Bank International among others.

Indications are there that several others are still nursing the ambition of joining the global foray to register Nigeria’s presence in the world.

While this is seen as a welcome development for a nation that nearly witnessed a financial industry almost crisis prior to the 2005 consolidation programme, what many are rather concerned about at the moment, is how these investments can be safeguarded to continue on a sustainable basis, in the wake of the global financial meltdown.

This therefore means that Nigerian banks having physical presence or any form of quoted investment in European or American markets, may need to trade rather cautiously since they would only be subject to the rules and regulations operating within the financial corridors where they are located. It would therefore be unimaginable for them to expect any assistance from the Nigerian government while they are still out there.

One way this can be done is for the various banks to ensure that they enter into business relationships or transactions that are proven, safe and secured, as doing otherwise would only expose them to the vagaries of the ongoing or impending financial meltdown.

At any rate, it must be borne in mind that should they make any investment decision outside due process, they also stand to reap the wild wind of the ongoing crisis, thereby taking the heat alone.
Despite the on-going crisis, Nigerian banks still see offshore banking activity as a distinctive attribute which could be leverage upon to out-compete others.

It is evidently an asset highly cherished by most banks, as these activities continue to boost the Gross Domestic Product, while increasing the quantum of foreign earnings accruable to the country.
As an emerging economy, Nigeria’s growing offshore banking portfolio will no doubt expand her banking horizon and also help businessmen interact more frequently with the nation’s business community.

It is in the light of the above realities that investment and management experts are advocating that concrete efforts be made by the various regulatory authorities to protect the gains recorded so far by ensuring that the problems in the international market do not adversely affect the operations of the bank. They are of the view that the Central Bank Governor and the entire management of the nation’s financial sector should rally support all Nigerian banks having branches outside the country, such that they would not end up burning their fingers or regretting ever venturing outside the shores of the country.