By Babajide Komolafe
The suspension of universal banking by the will create a level playing field in the finance sector, saysÂ Finance Houses Association of Nigeria (FHAN).
Universal banking gave the banks undue advantage over other sub-sectors of the finance sector, Mr. Eddie Osarenkhoe, FHAN President told Vanguard.
â€œUnder universal banking banks used depositors money to compete with other players in other sub-sectors of the finance system, he said. For example finance companies are licensed to do leasing and LPO financing. The banks are supposed to lend money to finance houses to do these business.
But what happened was that instead of lending to us they went into these businesses themselves using their large deposit base and customer base to out-compete finance house in these businesses.Â And this severely affected many finances houses who could not cope with the stiff competition from the bankâ€, he said.
â€œThe suspension of universal banking will eliminate this unfair competition. banks wont be able to use depositors money to establish businesses in other sub-sectors. That is why we had been calling forÂ the suspension of universal bankingâ€, he said
Meanwhile the CBN hasÂ commenced moves in preparatory to introducing the much awaited reforms for the finance houses sub-sector.
Last week the CBN announced the outcome of a routing examination carried out finance houses (Fhs) saying that only 53 FHs were active out of the 107 in existence. It said that 39 FHs have become inactive while 15 are undergoing restructuring. In a advertisement published on Monday, the apex bank said, â€œFollowing the routine examination carried out by the CBN on finance companies under its purview 53 of the companies were found active while 15 were undergoing restructuring to reactivate their operations.
Consequently, the general public is hereby informed that the under listed 68 finance companies with the CBN license/Approval-in-principle are the institutions currently allowed to carry out finance company business. Members of the public are therefore advised to transact business only with these 68 companies. Anyone who transact finance company business with company other than the under listed does so at his/her own riskâ€.
Vanguard reliably gathered that the routine examination was meant to ascertain the number of FHs in existence in preparation of introduction of a reform programme for the sub-sector.
It was gathered that since January, FHAN and the apex bank had been discussing on the way forward for the sub-sector and the publication of the list of FHs still in operation was part of the measures agreed upon. It was gathered that in addition to this the apex bank would soon organise a training workshop for chief executives officers (CEOs)of finance houses, while the regular meetings with the CEOs, similar to the Bankers Committee meeting, would be resuscitated.