Diamond Bank’s $550m Bond Issue Suspense

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Otti

DIAMOND Bank Plc has suspended the introduction of a seven-year $550m bond. Alex Otti, chief executive officer, said the suspension was due to pricing turbulence in the international debt market. He said the bank’s road-show to Britain and the United States in June coincided with uncertainties and the mid-tier lender plan to launch the bond sale in July after a two-week investor road-show to update fund managers on the bank and gauge appetite for the issue.

“Our efforts towards injection of Tier II capital have been put on hold following the persisting pricing turbulence in the international debt market. Shares in Diamond Bank, which rose by almost 40 percent since the start of the year, gained 1.3 percent on November 5. The bank was not in any significant danger of a capital shortfall and he will examine other options to raise funds, including a rights issue.”

He said that there are a whole lot of alternatives to explore, adding that the bank had a capital ratio of 17 percent at the end of September, against the 15 percent minimum required by the Central Bank of Nigeria. Otti, said the bank’s pre-tax profit in the nine months to September 30 rose to 10.2 percent year-on-year to N25.6bn.

AFDB’s $20 Million Infrastructural Investment

Niang
Niang

THE Board of Directors of the African Development Bank, AfDB, on October 30, approved a US$ 20 million equity investment in ARM-Harith Infrastructure Fund, ARMHIF. Mouhamadou Niang, acting director of AfDB’s private sector department, said the bank’s support to ARMHIF would contribute towards the delivery of modern and reliable infrastructure which would reduce the cost of doing business and enhance the region’s competitiveness.

“The lack of efficient infrastructure is a major obstacle to doing business in West Africa. Better infrastructure in the region would create an enabling environment for economic growth by the competitiveness of local production, promoting foreign direct investments and facilitating trade. The level of investment required for infrastructural development is far in excess of public and donor resources,” he said.

Opuiyo Oforiokuma, managing director, ARM Infrastructure, said: “We are very pleased to have an institution of the calibre of the AfDB as an anchor investor in our new Fund. AfDB has been instrumental in attracting the interest of other investors, including Nigerian Pension Funds which is a sector that plays a significant role in providing long-term capital for funding infrastructure development in Nigeria and beyond. We see tremendous infrastructure investment opportunities throughout West Africa.”

What Non-Interest Banks Must Do

SANUSI Lamido Sanusi, governor of the Central Bank of Nigeria, CBN, has urged non-interest banks to develop innovative products for the financial sector. The CBN governor made exhortation on November 5, in Abuja, at the National Conference on Islamic Banking and Finance in Nigeria. He urged the non-interest financial institutions to leverage on the regulatory environment, which he described as supportive, to make an impact on the economy.

Sanusi
Sanusi

He said there was a need for them to educate the general public and create awareness of this form of alternative finance and he said it would go a long way in realising the Financial System Strategy Initiative, FSSI, of financial inclusion through the creation of non-interest financial institutions and instruments.

Sanusi said: “In the face of the growing inter-connectedness of the global financial system and its integration, Islamic financial markets have established their presence in all the major global financial centres and constituted an integral part of the global financial landscape, playing a key role in deepening financial markets with products and instruments accessed across board. It is thus unrealistic for any existing or aspiring financial centre to be oblivious of this development. The efficacy of Islamic finance in attracting liquidity to national economies has also shown the contribution that Islamic finance can give to developing economies in building their much needed infrastructure.”

Umaru Mutallab, chairman, board of directors, Jaiz Bank Plc, called on the regulatory authorities in the banking sector to urgently develop Sharia-compliant liquidity management instruments. He said that it would enable non-interest Islamic banks to invest in key sectors of the economy. He commended the regulatory authority for approving the non-interest banking framework, adding that more work needed to be done in the area of Sharia-compliant liquidity management instruments.

He said: “We are proud to have pioneered the setting up of the first full-fledged non-interest bank in the country and I am confident that as we continue to expand and create the much needed knowledge and awareness of Islamic finance, people will begin to understand and accept it.”

Compiled by Chinwe Okafor 

— Nov. 18, 2013 @ 01:00 GMT

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