Nigeria has announced it will remove a ban on foreign takeovers of its banks, breaking the country's long-standing protectionism to open its financial services market to international competition.
As part of a plan to improve Nigeria's financial system, the new governor of the central bank of Nigeria and former head of First Bank of Nigeria, Lamido Sanusi, has said he will encourage large foreign banks to make acquisitions.
Nigeria's bank sector experienced major reforms under previous governor Chukwuma Soludo. Minimum capital requirements cut the number of banks from 89 to 24, and bolstered Tier 1 capital. However, the bank sector was hit hard by extensive margin trading losses after the Nigerian Stock Exchange collapsed late last year. Mr Sansui has promised to boost transparency and improve supervision.
Most foreign banks left Nigeria after a wave of nationalisations took place under the military regime in the 1970s. They may now return and target Nigerian banks that have networks across west Africa. Since the sector's liberalisation, only Standard Chartered and Citigroup have reinstated substantial operations.
