Atotal of 51 primary mortgage banks (PMBs) failed to meet up with the recapitalisation stipulated by the Central Bank of Nigeria (CBN) as at December 31, 2014.

This was revealed in the 2014 annual report of the Nigeria Deposit Insurance Corporation (NDIC). The report noted that 32 PMBs outrightly met the recapitalisation requirements either as State or National PMBs – 22 as State and 10 as National PMBs respectively.

The report further noted that the CBN granted provisional approval to 10 others which had not fully recapitalised to continue to operate pending their recapitalisation.  If they eventually meet up with the requirements, it would bring the total number of PMBs licensed to operate in the country to 42.

“The CBN had in August 2011 introduced a new capital requirement of N5 billion for national PMBs and N2.5 billion for state PMBs. The deadline of 31st December, 2012 was given for compliance with the new capital requirements. However, due to the inability of many PMBs to meet up with the date, the deadline was extended to 30th June, 2014. As at 31st December, 2014, 22 PMBs had met the capital requirement of N2.5 billion to operate as State PMBs, while 10 PMBs met the requirement of N5 billion to operate as a national PMB.

Also, the CBN had granted provisional approval to 10 PMBs that were yet to fully recapitalise to continue to operate pending full recapitalisation. The CBN had directed the PMBs that failed to meet the recapitalisation deadline to merge or convert to finance companies or MFBs. It is instructive to note that 51 out of the 83 PMBs failed to meet the recapitalisation requirements,” the report stated.

NDIC also observed that the mortgage sub-sector continued to encounter challenges that hindered its capacity to act as catalyst for the development and provision of affordable housing in Nigeria.

Some of the challenges include: Delay in accessing NHF Funds/Dearth of long term funds – most PMBs find it difficult to provide the required bank guarantee to access NHF and only 4 are listed on the Nigerian Stock Exchange (NSE) with access to long term funds through the Stock Exchange window;  Difficulties in deposit mobilisation due to lack of understanding of the nature of business of PMBs, the public prefer to open accounts with deposit money banks (DMBs); Land Use Act, which had made the process of perfecting title to landed property burdensome, slow and costly;  and Under-developed Mortgage-Backed Securities (MBS) market – MBS allows mortgage assets to be traded on recognised stock exchanges, at present MBS do not exist in Nigeria.

The other challenges, the NDIC report noted, are: High cost of building construction and; Weak corporate governance and risk management practices – weak corporate governance and poor risk management practices had continued to pose a major challenge to PMBs.

The Corporation said it had continued to support the development of PMBs in Nigeria by organising sensitisation workshops for the PMB operators across the country. Specifically, it noted that it organised a 2-day workshop in both Lagos and Abuja in September 2014 with the theme, “Developing and Implementing Effective Risk Management in Primary Mortgage Banks in Nigeria. A total of 384 participants drawn from mortgage banks, Mortgage Banks Association of Nigeria (MBAN), Bank of Infrastructure and NAICOM attended. “NDIC’s objectives for organising the workshop among others were to: Promote financial inclusion; Enhance availability of housing to Nigerians; and Foster the stability of the Primary Mortgage Financing subsector.


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