• China lends Nigeria Dollars 2bn in exchange for oil talks. • Ft com site : China oils Nigeria talks with loan

Investment banking shows a very strong growth in revenue of 26%. The headline earnings is affected by a lower gain than our property portfolios. And as you've seen in some of Simon's slides, we've made more than ZAR200 million less on realizations of those in the last year, and that has affected the headline earnings for this business. In addition to that, we also had a much higher tax rate in this business, particularly in the South African business, compared to a year ago.
A noteworthy feature for us has been the strong growth in our M&A and advisory franchise, both in South African and on the African Continent, and starting internationally as well. We've made great strides in that business over the year, and have seen very good growth in revenue, and have recruited a number of very good people into that business.
Our Acquisitions Finance business has become a mature business, adding immense value to our client solution approach across the globe, and we're very excited about that moving forward. When we look at our Project Finance business, they've made great strides this year, particularly in the fields of mining and resources, where we had a very strong franchise globally. Infrastructure and telecoms, particularly within emerging markets focused on infrastructure and telecoms.
Although smaller than our peer group, we've had a very good contribution from our private equity and unlisted investment portfolios in a year of hard turmoil and volatility. And we also think that this is a business that we can grow far better going forwards.
The most noteworthy positioning here for us is the progress we think we've made in repositioning Investment Banking for us as a business, both in South Africa and on the African Continent. And we are very excited about the prospects of that in the year ahead.
Global markets are growing revenue by 54%, and headline earnings by 68%; a very good contribution there. We've had very good contributions from all of our businesses. Our Resources & Commodities business grew by 40%, our Foreign Exchange business grew by 36%, our Equity Derivative business grew by 51%, and our Debt Capital Markets and Interest Rate Products business grew by 75% in the year that's been. Right across the spectrum of all of that, a very good contribution, and an excellent team of people that we now have in place pulling this franchise way beyond the borders of South Africa.
In a year like we've seen, we've had a much higher contribution from proprietary trading profits. I think one of the noteworthy features of the team of people that we have in place is an anticipation of what is about to happen in the market, and to try and leverage of that in advance. And for us, the year that's been has been particularly good in that regard, but I will elaborate on that a little bit more, just now.
We also believe that we have made great strides in increasing the scale of our operations in some of the larger emerging markets, as well as the African Continent, where we've been very active in the further development of these capital markets in many of these countries. For us, the focus of this business in the year that's been has centered around risk management and, as you see for the year ahead, it will remain a key focus area.
The current market conditions have attracted a lot of attention from many market participants. Simon has touched on all of that, and I won't go into too much detail on that. But perhaps informative is to look at what has actually happened in the market over the last year.
We have interpreted the market events in three different categories. Firstly, the subprime crisis, secondly, the ensuing liquidity crunch emanating from lack of confidence and dislocation in those markets, and then thirdly, the thing that all of us are most concerned about watching for a whole scale asset repricing and deleveraging by funds globally. And the impact of that would obviously be quite horrendous.
When you look at the graph in front of you, you'll see that during the first bit of turmoil, the emerging market cluster actually didn't perform and didn't react as much as the developed economies of the world. And during the months of July/August and early bit of September, clearly the developed world was far more volatile than emerging markets. The second bout of volatility, starting at end of October through November, clearly had emerging markets marching in step with the developed world, and a far greater impact on all of operations.
When you look at the graph in May, I will cover in slight more detail than we did at half year some of the macro hedges that we executed during the month of May. And when you look at our trading performance for the business, you will find that that has had a major impact on the performance for the year that's been.
Simon touched on South Africa, and when you look at the developments in South Africa plotting the same graphs against the credit default spread for South African sovereign position, you can clearly see the change that has occurred since November in South African credit spreads, and that has continued into this year. And it would put a far greater strain on banks focusing on liquidity and funding themselves in a domestic market, particularly given the requirement to have greater term funding.
When it comes to risk management, we believe our credit portfolio is pretty clean. We think we've made further strides in improving the quality of our credit portfolio. In South Africa, we've received advance status from the regulator here domestically, and that has required a huge amount of work for us. We've embedded a proper economic capital model now in our credit risk framework, and that becomes a key feature of our business going forward.
In terms of subprime, we've had no direct subprime exposure, and we continuously review all of the portfolio of assets that we hold to make sure that we don't have any of those.
When we refer to the secondary effects, clearly, as a trading bank and distributing a lot of our assets across the global scale, we often participate with investors, fund managers, and particularly hedge funds, on a global basis. In reviewing our portfolio of hedge fund exposures during the month of July/August, we noticed one particular hedge fund that we thought could have a liquidity problem going through towards the end of the year, and we've made sure that we had collateral on the particular exposure that we had with them.
And during the month of October, it became apparent that their liquidity position had worsened at that point in time, and the first day they missed their margin payment with us, we executed in terms of our documentation, and acquired the assets underlying the exposure we had with them. Two weeks later, the fund was placed in liquidation, and that process is in process now.
What we did, the underlying assets in this particular fund was subordinate data of major European banks, and we had an exposure of EUR80 million against this particular hedge fund. We took over all of the assets, and we've disposed of the assets through our trading operations and incurred a loss of $10 million, which I'll highlight to you just now, in executing that. And that for us was the only exposure that we've had within that.
During our half year results presentation, we highlighted some of the macro hedges that we've implemented. It was quite a difficult decision at the time, when you look at where we found ourselves in May, to pay premium for buying some of these options against potential downturn in markets. We focused on countries where we've had big operations and countries where we've had exposures, as well as currencies and in addition to that, equity exposure.
During the month of August, this has proved to be a very good investment for us. At the height of volatile periods, we were particularly well hedged in terms of our exposure to these markets and actually managed to run that to the end of December. The hedge was structured at a time to mature 50% in December and 50% in July next year. And so we maintained a big hedge position all the way through to June this year. And in the current year, that has also been a particularly good position for us to have.
Given the high level of our trading revenue, we include a slide depicting our value at risk. The green line at the bottom is our value at risk plotted on a daily basis throughout the year. The blue bar graph that picks the profitability of our trading operations on a daily basis throughout the year. And this is a particularly good slide for us to have.
If you look at the negative line round about in December, a big part of that reflects the asset position that we had in the hedge funds where we've sold the assets in a very short period of time. And that, I think, reflects some of our risk management approach, to try and remain risk light and try and be able to capitalize on these opportunities when they arrive, as opposed to try and defend a very difficult or poor position in any of our operations.
I've highlighted early on that we've had a much higher contribution from proprietary trading in the year that's been. And the best way to depict the riskiness of that is to plot the daily contribution to trading revenue. The red line depicts zero profitability and when you look at the distribution, you can see that we almost have a [log] normal distribution in terms of profitability, with some very profitable days. And including the items highlighted earlier on, we had one day where we have lost ZAR40 million.
In Nigeria, we've now made very good progress in reaching the stage where we've achieved the first level of integration of our systems as at end of December. Chris Newson, who used to head our Corporate Investment Banking business on the African Continent, has relocated and has been made the CEO of our business in Nigeria.
We generated headline earnings in Nigeria of ZAR247 million, compared to ZAR49 million the previous year. And this is a reflection of the acquisition that we've made, as well as a lot of work that has gone into our own organic business, particularly in the area of global markets, in the build up to integrating that business in Nigeria.
At this point in time, we have a market leading position in Global Markets, in Investment Banking, in Advisory business, Stock Broking, and Asset Management in Nigeria. And we think it provides a particularly good platform for us to build a proper Corporate Investment Banking business in the years that lie ahead.
We are particularly optimistic about the potential for Personal & Business Banking in Nigeria. When you look at the success that some companies like MTN has had, with a huge population, we think our investments in that regard, in the few years ahead, will hopefully pay huge dividends going forward.
We expect to generate earnings in Nigeria this year in excess of $100 million and we think that will fit us up to turn us into very, very strong franchise. For us, Nigeria is a key priority market. When I look at Nigeria, it reminds me a lot of banking market in South Africa in the early '90s, '91 to '95, and I think many of the lessons that we've learned here will stand us in particularly good stead when we move into the second phase of our business in Nigeria.
In recent times, the Central Bank in Nigeria has also announced further regulations that limit the entry of foreign banks into Nigeria unless you have branches in many countries or have operated in Nigeria for many years already. And we think that provides us with the unique opportunity as a foreign bank in Nigeria to grow our business.
Notwithstanding that, the Nigerian banking sector is well capitalized, well run banks and they can participate meaningfully in the further growth of the business sector in Nigeria. But we do believe that we have a role to play in that economy and we are particularly excited about the prospects ahead for the Nigerian economy and for our business there.
When we look at the year ahead, clearly the focus has to be on risk management and particularly on pricing of risk. There are many opportunities in the market, and if you have not many bad positions you can participate in these opportunities. But it's quite important to understand the price at which you should do that and deal with that effectively.
Looking at our revenue budgets, we've always been fairly aggressive in budgeting for growth and revenue. And when we look at the revenue budgets ahead, we have to reflect on the costs that we have set aside for further investments in our businesses in this environment going forward. We have made great strides with people over the last few years and we would hope to continue and take that forward to the next level in due course. Massive focus on capital management, and that continues with the new Basel II implementations across the world.
If I sum up the year ahead, I think it's very much like the year that's been. It's a time when you want to reflect very carefully if you should be dancing, when you should stop dancing. and continuously look over your shoulder to make sure there's a chair to take if the music stops.
We think we're reasonably well positioned in terms of the asset quality of our portfolios, the business mix, the deal pipeline that we have, and a customer focus that we have embarked on for a number of years. Hopefully that will position us for another exciting year. But it would be naive to not take into account the state of financial markets globally and, in particular, the state of the South African market as well. Thank you very much.
JACKO MAREE, CEO, STANDARD BANK GROUP LIMITED: Thank you Ben. And just for clarification, Ben when he was talking about the macro hedge, he referred to July -- that half of a rand to July next year; it's July this year. I think he was thinking about when it was introduced last year. So it's to July '08.
Just talking very briefly about Liberty Life because their results are well known. Just a reminder that Liberty now owns 100% of Stanlib and I think that move has been the correct move, to consolidate all the focus and the effort around Stanlib in one place and not split ownership between the Bank and Liberty. Their contribution to our earnings was up 15%, although I think we all understand that the correct metrics for measuring the performance of a life company, wealth management company, not necessarily earnings, but other critical dimensions.
But Liberty performed well across all dimensions and we're very encouraged by the progress that has been made by Bruce Hemphill and his team, a restructured team that has taken some time to build up. And we're excited also by the fact that they will be working with us more actively across the African continent. So on all metrics, Liberty performed extremely well.
To wrap up, Standard Bank doesn't normally use superlatives, but I think we do have to say that 2007 was a momentous year for our company. We have, as you've heard in great detail from Ben, weathered the global storms and stresses, which we haven't seen for the last ten years or so, and we handled them well. We anticipated some of the changes and challenges and we are very pleased with the performance that came out of our trading operations in very challenging times, particularly when you're a relatively small bank on the global scene.
The acquisitions that we concluded last year also, I think, give credence to what we have talked about for many years. We have now actually got some serious acquisitions under our belt and hopefully there will be more to come in the future.
Obviously the ICBC transaction was a historic transaction. It's fitting that the money, the ZAR36.7 billion was paid to shareholders and came to ourselves on Monday, a day or two ago. And so we will be reporting 12 months hence, in March next year, how we've done on our synergy benefits. We remain committed to all the synergy benefits that we conveyed in November and we think that we've negotiated a very strategic position.
The Tier 1 capital that came in, we perhaps may have taken a bit of criticism for at the time; I think, with hindsight, the timing was extremely fortuitous. And we have a very strong and supportive shareholder that's looking to grow with us. And we achieved all our published objectives from a year ago.
I would also point out there is a slide in the booklet that refers to our achievements against the financial sector charter, which has continued to serve us well. We remain very committed to it. One of the outstanding numbers, I think, is that in South Africa 49% of all of Standard Bank's managers are black. A huge move from some years ago. So whilst we have been doing a lot of things in other parts of the world, we've also kept our eye very close to the issues of the day in South Africa.
Since the end of the year obviously, the global economy has become, if anything, more difficult. You've seen banks around the world having to raise capital at rock bottom prices, and it's clearly become tougher. It was almost as if you returned, or I returned from my summer holiday to a different world, both globally and in South Africa. And clearly business confidence is somewhat depressed. We think that it's somewhat of an overreaction and that normality will return. And the fortunate position, I think, for Standard Bank is that we have no major identified problems, as you've heard from the team, at the moment. So we're going into these difficult times with a clean slate, as it were.
And Basel II has been implemented from January 1, but much of the work and effort will only happen in the year or two ahead, and will require a huge amount of focus as the regulators become used to it and as we become used to it, and understand the impacts better. So we've only started walking down that road.
The ICBC transaction, depending on what -- you've obviously got to make assumptions about how quickly we'll invest the money, and so forth. And we're not in a rush; we're not going to make haste. There are going to be some very interesting opportunities, I think, that are going to emerge. But clearly, if the cash is sitting on deposit for a while, that will be dilutive and one can make whatever assumptions one would like around that. But it definitely gives us longer term growth potential.
I said that we remain committed to the synergy benefits that we announced in November, and a large team of us will in fact be in Beijing for the first major strategic cooperation meeting, encompassing all workstreams post the closure of the deal. So we'll all be in Beijing ten days from now. We think that our strong capital ratio and surplus capital is a huge competitive advantage right now, and I've referred to the cooperation agreement, or the measurement of the cooperation starting in March, as we speak.
So in conclusion, we think that our geographic diversification, which we have taken some flak for over the years, has paid off. We think that the growth in South Africa is going to moderate to more normal levels; the growth rates of the last four years have been exceptional and unusual. The growth in a number of the countries that we're in, Nigeria in particular, we think is going to exceed the growth rate in South Africa. And of course, the synergies coming out of ICBC are an added plus. And the capital injection really should allow us to choose our spots, and the environment, if you're an acquirer, has become a lot more friendly than it was last year.
Just on our objectives for the year ahead, our medium term objectives are on the right. On the left for '08, for the year ahead, the ROE, as we disclosed in November, probably a sensible objective is around 21%. The growth in normalized headline earnings per share, given what we've seen in the markets over the last number of months, given the fact that we've made certain assumptions about how quickly we might invest the ICBC capital, we think it is more sensible to plan around growth for this year of inflation, which will probably be around the 7% mark, plus 5% or so. And we're not saying 5% or 6%, we're saying roughly 5%. We're not trying to be specific, 5%, 6% or 7%. We're trying to give an order of magnitude of the CPIX plus 10%. We think there is a step change down given the environment and given the short term dilution effects of a major capital injection. The credit loss ratio is heading back towards the 1% mark. You can see that from the graphs.
And our cost-to-income ratio, in the booklet it's reflected at 51.5%. We've debated that over the last day or two, and discussed it with the Board again yesterday. From the 52%, excluding MasterCard, for the current year, we think we should get to below 51% in the year ahead. But I hasten to add, the medium term objectives have not changed. We just think we've obviously got to make some adjustments for the year in which we find ourselves.
So on that note, I'll ask my fellow presenters to come up to the stage and we'll take questions. Are there questions from the floor?
JACKO MAREE: Any questions from the floor? We have a microphone coming.
UNIDENTIFIED AUDIENCE MEMBER: I have a question please for Mr. Ridley. Mr. Ridley, in discussing conduits under the heading of liquidity you stated, and I quote, that these are managed on behalf of investors. That being the case, why does Standard Bank assume any exposure?
SIMON RIDLEY: I'll answer it initially, and then hand over to Ben, who -- these are part of Ben's business. But effectively, because there can be a liquidity and a mismatch in the conduits, where it's invested in longer term assets and its funding is shorter term, it needs a manager to provide liquidity if there's ever a mismatch in the funding. And that's how it works. And, as I've said, it's not a particularly large exposure in relation to Standard Bank, but that's why. There has to be some provision of liquidity to actually make the conduit work.
BEN KRUGER: There's a contractual responsibility in providing a liquidity facility to the conduit, and therefore we would act in terms of that. If the conduit fails to place better from a liquidity point of view, clearly we would be responsible to deal with that. That's completely different to assuming a credit risk, and I think you're referring to a credit risk embedded in the conduit. And obviously the assets in the conduit stand on their own from a credit perspective.
UNIDENTIFIED AUDIENCE MEMBER: May I take this further please, Mr. Maree?
JACKO MAREE: Sure.
UNIDENTIFIED AUDIENCE MEMBER: Okay, I would quibble, Mr. Ridley, with the use of the word limited exposure, when we're told in the next line that the total exposure's ZAR13 billion. I don't quite know how limited is defined. Let's take a worst case scenario. I don't know what the composition of the conduits are; they're rather complex instruments. But what would the loss be if the whole conduit imploded?
And secondly, if there is already an exposure, where is it? In which item is it included in the balance sheet when I refer to page 72? Is it under derivatives, for instance?
SIMON RIDLEY: No, it's not on our balance sheets, so we don't own the conduit, we manage it. And the worst case situation is we could find ourselves with ZAR13 billion worth of AA minus rated assets that we have to buy, and effectively take on our balance sheet. And to the extent over time there's some potential mark-to-market adjustment down in those assets, there could be a loss. But we believe they are highly rated assets, and that's the risk. It's really taking on these assets, and would there be some fair value adjustment in the future.
BEN KRUGER: Perhaps I could comment on the liquidity. Clearly we factor into all of our liquidity analysis a worst case scenario as we assume all of the funding required for the conduit to the amount of ZAR13 billion. When you look at our accounts in terms of structural mismatches etc., all of that has been factored into that process right there.
If you then look at our balance sheet you'll find that we maintain surplus liquid assets in excess of our requirement, which already runs at quite a high level. But the excess surplus liquid assets that we hold amount to ZAR60 billion which clearly, one of the components to deal with that would be to make sure that we don't get into any liquidity problem in South Africa. But much wider than that it's a very key focus area for us to make sure that at all times we have sufficient liquidity to deal with any eventuality.
If you look at banks, international banks that have gotten into trouble, has often gotten into trouble more as a result of liquidity that of real credit risk. And so for us, liquidity remains an asset key focus.
The cost of maintaining those surplus liquid assets amounts to many hundreds of millions of rand, and clearly for us, we wouldn't incur the cost of more than, somewhere between ZAR300 million and ZAR500 million if we didn't think it's a worthwhile investment to buy actually the protection not to have a problem around any of these.
JACKO MAREE: We can pursue this perhaps offline. We gave the figure I think because it is topical. This is a liquidity and funding issue, it has got nothing to do with losses or with credit risk issues. But if you wish to pursue we'd be happy to talk about it some more afterwards.
UNIDENTIFIED AUDIENCE MEMBER: A final question please Mr. Maree. Would I be correct in assuming that the ZAR41 billion increase in Group companies on the balance sheet is essentially attributable to the incorporation of Liberty Life?
JACKO MAREE: Which page are you referring to?
UNIDENTIFIED AUDIENCE MEMBER: 72 on the balance sheet under assets.
JACKO MAREE: Simon, do you have any immediate answer? Otherwise we can get back to you with the detail -- the increase in Group companies?
SIMON RIDLEY: That relates to largely associates and joint ventures. I'll look it up and come back to you later.
UNIDENTIFIED AUDIENCE MEMBER: Thank you Mr. Maree.
JACKO MAREE: Are there any further questions from the floor? There's a question at the back.
UNIDENTIFIED AUDIENCE MEMBER: It's just a question for Ben. Ben, could you just explain what nature those macro hedges took and what your results might have looked like if it hadn't been in place? As well as whether you have taken any action to roll those hedge or renew them this year? I know you mentioned that half of it rolls off in July, I think you mentioned. I don't know if there's anything to replace it?
BEN KRUGER: Yes, first of all they're not long or short positions in real life. They're all option structures that require premium to be paid and you have an expense incurred, but not necessarily a liability if you get the hedge wrong.
Secondly we try to reflect the types of exposures that we incur, and clearly some of the more liquid indexes like I-trax featured quite strongly in the construction of that as well as the JPM EMBI. In addition to that we looked at some of the countries where we have more cross-border exposure, countries like Russia, China, Brazil, Nigeria, South Africa etc., and we hedged some of those potential cross-border exposures also with option type structures.
The difficulty clearly with hedging it with an option type structure once your hedge kicks in through the strike level you're in the money, and if the hedge moves out of the strike level again you're not in the money. So if you want to bank the money you then have to start trading under the hedge.
For us, we didn't try to make money out of this so we tried to make sure that if markets are volatile that we didn't have to trade against market positions at times of increased volatility or reduced liquidity. The highest level of profitability on a daily basis that we've generated on a hedge, I can check that, but I think it was about $7 million on a day.
JACKO MAREE: It was important, but it wasn't dramatic. But I think it was also just indicative of proactive management of the situation.
BEN KRUGER: The profitability included in the results is actually not significant. For us the focus was not to try and make money out of that. The focus was to try and make sure that if things go really badly wrong, that we take the edge off anything that goes badly wrong. We will review those positions in due course and we continuously do that as a matter of normal business practice now.
UNIDENTIFIED AUDIENCE MEMBER: Just a question for Pete. Looking at the credit loss ratio on mortgage lending, you guys have shown in the past your early arrears numbers which looked at all the times you've disclosed it, fairly good in comparison to the market. But now that we've seen the other banks' underlying credit loss ratios per category this looks a little bit higher than expected. Now this is obviously, I'm saying this as a first client's impression, but the underlying 54 basis points for mortgage lending looks a little bit higher than what I would have expected compared to the market, given what you've shown early arrears on the past. I just want you to comment on that.
PETE WHARTON-HOOD: Sure, we spent a lot of time trying to understand the comparability issues as it's a question asked often of us and we aren't privy to disclose details that sits inside the other banks. So what we have rather chosen to do is confirm with you the consistency of the calculation of the 54 basis points, the absolute quantum in the non-performing loan categories. We've identified the drivers of the provision, and if you work through our calculation you will see that if your non-performing loan balance stays exactly the same, but interest rates go up your time value of money adjustment increases. You'll find that in the context of an increasing absolute level of NPL the value of your collateral that you value against it, we carry at 80% and we've done that consistently, but if that were to move from 80% to 82% or 84% or 87% then your credit loss ratio will come down.
So it's tough for us to be able to answer a question in a comparability sense. What we can do is substantiate the consistency of the methodology that we've applied here. And the reference point to be drawn in an early arrears sense is to take our disclosed position of the DI900s. And you will see from an industry comparison that our arrears position as a percentage of book is significantly lower than the industry in the aggregate. And if you take our piece out of the DI900 you'll will be able to see what impact that has on the industry number. But other banks haven't chosen to disclose their DI900 position.
JACKO MAREE: Yes it's a difficult question for us to -- we've given you quite a lot of information. Obviously the levels at which securities are valued by different banks, it will different etc. So I guess it's not really for us to speculate on why our figures are not in line.
Are there further questions from the floor? Quick questions from, were we going to the webcast next?
UNIDENTIFIED SPEAKER: [We have no questions from the webcast] (inaudible)
JACKO MAREE: No.
UNIDENTIFIED SPEAKER: Hello.
JACKO MAREE: Yes.
UNIDENTIFIED SPEAKER: I've got a question from the webcast, probably for Simon, what do you expect the credit loss ratio to be in 2008 for the Group?
SIMON RIDLEY: We said 1% right. If we assume the traditional lag effect from interest rates, that we've had a lot of hikes, and we assume our lending book actually start slowing in growth. So the loss ratios as we all know is a combination of the [banded] charge expressed over the loan book and we see a loan book growth that start slowing. So it could well be in the 90s and I think that's our current view and that was why we talked about a target of 1%.
JACKO MAREE: Is that all from the webcast? Any questions from the conference call?
OPERATOR: There are no questions from the conference call.
JACKO MAREE: Okay, well, thank you very much. Mike, is there anything else you need to say or? We'd like to thank the Investment Analysts Society for hosting us and please join us for drinks afterwards. Thank you for coming.
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Document FNDW000020080312e4350002t
This Day (Nigeria) - AAGM: Chinese Bank Partners Oceanic On Export, Trade Financing.
895 words

5 March 2008

This Day (Nigeria)

AIWTHD

English

The Financial Times Limited. Asia Africa Intelligence Wire. All material subject to copyright. This Day (Nigeria) (c) 2008 All rights reserved
Industrial and Commercial Bank of China (ICBC), China 's largest bank, has expressed interest to partner with Oceanic Bank in export and trade finance, given the growing strong economic and trade relations between China and Nigeria .
"We are targeting countries with good market potential and strong trade ties with China , and ICBC shares complementary features with Oceanic Bank," says Wang Zhenglong (Deputy Head, Bank Department) in a business session with the management of Oceanic Bank team led by Dr Cecilia Ibru in China last week.
"We need more friends like Oceanic Bank and I can recall that ICBC and Oceanic Bank won the Best Bank of the Year 2007 in their respective countries awarded by The Banker, a subsidiary of the Financial Times of London".
"We are eager to sign an MOU with you as ICBC and Oceanic are growing rapidly" says Wang.
Responding, Dr Cecilia Ibru urged ICBC "to key into the exponential growth in the Nigerianeconomy in areas of trade finance, project management, industrial machines, infrastructural development, renewable power and telecommuhnications".
The partnership Wang said will create a good opportunity for both banks to finance trade flows between Nigeria and China as well as other parts of Asia given ICBC branch network of over 17,000 in China and Operations in more then 30 countries in the world.
Oceanic Bank's rising branch network targeted as 600 before end of the year is an attractive synergy of immerse benefit to both Nigerian and Chinese investment."
This partnership will bring about expanded platform for growth for both ICBC and Oceanic Bank and good news for its customers" added George Liu ICBC Head, Project and Finance).
ICBC is one of the world's largest banks in terms of market capitalization and has the country's (China) most advanced retail strategy. it has the largest client base in the China with more than 175 Million personal Banking customers.
Last year, ICBC acquired 20 per cent ($ 5.5bn acquisition) of South Africa 's Standard Bank Group.
It would be recalled that Oceanic Bank was recently singled out for praise by both the United Nations and the African Union (AU) at the just concluded 2008 African Private Sector Forum, organized by the duo and held at Addis Ababa, Ethiopia.
The bank's Chief Executive, Dr. (Mrs.) CeciliaIbru, who was represented at the conference by Mr. Kola Ayeye, Executive Director in charge of Lagos and West assured the international community that Oceanic Bank would continue in its strive to effectively alleviate poverty in Nigeria through the funding of the real sector and its corporate social responsibility initiatives.
Georg Kell, United Nations Global Compact Executive Director lauded Oceanic bank for its many social responsibility initiatives and its many efforts at reducing the poverty level of the populace. The bank chief said Oceanic Bank over the years has evolved as a socially responsible entity that places emphasis on giving back to the society what it gets from it. The policy, according to her, was borne outof the need to provide for the needy as well as help contribute to the social sector like education, healthcare, security among many others.
On education, she said the bank recently donated a Centre for Business Entrepreneurship Development to Obafemi Awolowo University , Ile-Ife. The center, according to her will serve as incubation center where young people would be adequately developed and properly equipped with all the skills required for them to become successful entrepreneurs. Oceanic Bank also recently provided Government Girls College , Dala, in Kano with basic infrastructure required for studies. The students hitherto had no chairs and desks in their class rooms - they were sitting on bare floor. The commitment cost the bank over N10 million. The initiative is to be repeated in the different school every year.
According to her: "The Bank also built a set of classrooms for the students of Nassarawa State University , worth N250 million as a way of improving the process of teaching and learning in the institution. The move was aimed at reducing theburden of providing the facility from the state government, which had called for support from the private sector.
Also at Delta State University , Abraka, the bank also donated an IT centre, worth millions of Naira to the school authority for the purpose of the students."
The bank also donated relief materials worth millions of Naira to victims of the recent floods in Adamawa and BornoStates . The materials were handed over to those affected through their respective state governors. The gesture was borne in a bid to ease the pains that the affected families went through after the floods which destroyed properties worth millions.
Worried by the high state of insecurity in the state, the bank donated 30 Toyota Hilux buses worth N150million to Lagos state security fund to improve security in the state.
As a way of promoting industrialization the country, Oceanic Bank is currently financing theset up of industrial parks in key states among which are: Abuja , Osun, Delta, Bayelsa. At the industrial parks, infrastructure would be provided for interested industrialists who wish to set up their facilities there. This is aimed at building a cluster of industries in selected sites so that they can jointly use existing infrastructure to enjoy economics of scale.
Distributed by AllAfrica Global Media. (allafrica.com)
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Document AIWTHD0020080306e4350002w

Reflections - Copy, Beg Not China [opinion]
by Issa Aremu

1,258 words

3 March 2008

01:11 PM

All Africa

AFNWS

English

(c) 2008 AllAfrica, All Rights Reserved
Mar 03, 2008 (Daily Trust/All Africa Global Media via COMTEX) -- President Umaru Musa Yar' Adua has just concluded a four-day state visit to China. This visit has once again brought into sharp focus SINO/Nigeria relations with more eyes on Nigeria's balance sheet, (ever in the red!) than China's accounts (ever in surplus).
Development observers agree (and they now say so openly) that there are three global development challenges in the new millennium. The number one development challenge is China. The second development challenge is China. And the third development challenge is China. If China intrigues and confounds global development observers, it is certainly understandable why Nigeria has been striving to come to terms with China. No country has recorded remarkable rapid economic ascendancy in the past 25 years like China.
With 1.5 billion population and consistent 12% growth rate in the past 3 decades, China has shown that huge quality human resource is indeed an asset and not a liability. China shows that development process is NOT a zero-sum game in which growth is traded off for jobs and in which few are well-having and many lack basic well being. China shows that the issue is not extractive resources (China not an OPEC member) but value additions and manufacturing (China has more functioning oil refineries than Nigeria!).
China shows that growing the GDP does not mean pushing mass of people into the margin of mass poverty. On the contrary, China is perhaps the only country since the great Industrial Revolution that has combined consistent aggressive industrialisation drive with high growth rate side by side with full employment. China makes nonsense of neo-liberal/ textbook received wisdom about jobless growth. We can indeed have job-led growth, China proves that. China has shown that addressing production issues is not mutually exclusive from confronting poverty and coming to terms with distributional issues. While many sub-Saharan African countries, including Nigeria have pushed millions into poverty due to IMF inspired "reform" process, (SAP) China is the only country that has recorded the largest reduction in poverty in history in recent time. Indeed it has lifted as many as 250 million people (twice the population of Nigeria!) out of poverty.
In international trade, China's goods and services rule the world such that the new America's Cold War with China is about articles of trade rather than weapons of mass destruction.
Precisely because the challenge of China is about growth and development, no serious Head of government of a developing nation goes to Beijing without talking development. It is therefore not surprising that President Yar' Adua made major development pronouncements in Beijing (even though many observers would prefer such pronouncements on the floor of national assembly at Abuja if only to keep our legislators busy beyond "overseeing" oil revenue sharing, sorry, (budget debate)) .
Once again President Umaru Musa Yar' Adua has shown that energy is central to his 7-point agenda. In far away China, he disclosed that his administration plans to increase the country power generation by March next year. The government, the President stated, would make outages a thing of the past by the year 2011 to "successfully fast-track our economic growth". To this extent he welcomes the Chinese investors who want to partner "on the use of coal, as we explore all possible sources for additional power generation".
By the way, it is instructive that Yar' Adua's engagement with Hu Jintao was on development compared with his engagement with George Bush which was pointedly and one-sidedly about American strategic calculation on oil wells protection in Africa (remember Africom!). Also when compared to his predecessor's (President Obasanjo's) engagement with Switzerland on Abacha loot, it is self evident that the difference is clear with China which is not yet notorious for looted Africa's fund.
The critical question however, is how do we translate speech making about development in Beijing to practical developmentalist steps in Abuja? What should be the content of SINO-NIGERIA relations such that Nigeria will be one of the leading 20 economies of the world, which in any case China is?
Yours sincerely is excited that President Yar' Adua called for the setting up of "a mutually-beneficial strategic partnership with China". This is a radical departure from the slavish/unequal relationship with China during Abacha and Obasanjo's era and the attendant scam (remember fake Railways deals!) and rot (ask NAFDAC about Made-in-China fake drugs).
Beg Not China but copy China! Notwithstanding development gap, Nigeria has a lot in common with China and indeed could be another China, just as China used to be like Nigeria. Nigeria is the most populated country in Africa just as China is most populous country in Asia as well as in the world. In development parlance we are talking of two largest markets in the world. But while China is one huge working and productive house, Nigeria is yet to be unbundled to realise its potentials as it is weighed down by consumption and idle capacity.
Paradoxically the two countries are undergoing reforms. But while China's reforms are delivering on promise, Nigeria's reforms are far from the expectations. This is where Nigeria can creatively copy China. Yours sincerely recommends for President Yar' Adua Joseph Stiglitz book: Globalization and Its Discontents, (in particular chapter seven).
President Yar Adua should appreciate how China's reform has delivered prosperity compared to how Russia's reform (read: Nigeria) has promoted despair. Stiglitz, the Nobel Prize Winner in Economics shows that the strength of China lies in its home grown policy initiatives. China just like Poland ignored the so-called Washington Consensus (devaluation, uncritical privatization, trade liberalization, removal of subsidy etc) as promoted by IMF and the World Bank and went for creative alternative local policies that reflect national priorities. China employs "gradualist approach" to reforms compared to "shock therapy approach" of Russia which uncritically privatised public enterprises without addressing fundamental issues of goods and service delivery. China built democratic mass support for reform agenda not through election riggings, political thuggery and mass unemployment as in Nigeria OBJ's era.
On the contrary China shows that stability, political unity of purpose and common wealth (as distinct from private aggrandisement and corruption) are indispensable to reform agenda. China also has negative (not just zero) tolerance to corruption (it engenders capital punishment in many instances). Lastly the point cannot be overstated that China appreciates the imperatives of labour-intensive industries for a populous nation. Nigeria is boastful with enclave sectors like Telecoms, banks and oil and gas but the labour absorption is therein insignificant. On the contrary China holds on to textile and agricultures where millions are employed.
What is good for China is good for Nigeria; macro economic stability and protection of domestic market. The issue is not to be romantic with China but to use the President's word, be "strategic" with China just as China has been strategic in its dealings with Africa. President Yar Adua seems on top of the challenges of China when he reportedly said; "Given their unique respective geo-political statures, Nigeria and China have a duty to mutually reinforce each others' growth and development.
Our administration is greatly encouraged by the fast-tracked economy development that China has achieved, which has made her the world's fastest growing economy and greatly enhanced her influence and stature in the world". Good luck Nigeria.
Document AFNWS00020080303e433001hf

President Yar'Adua Announces New Direction in Agric Dev
484 words

3 March 2008

10:00 AM

All Africa

AFNWS

English

(c) 2008 AllAfrica, All Rights Reserved
Abuja, Mar 03, 2008 (Nigeria First/All Africa Global Media via COMTEX) -- President Umaru Musa Yar'dua announced in Beijing on Friday February 29 that his Administration was "completely redirecting" the Federal Government's policies in the agricultural sector to focus on large-scale commercial agricultural production with the full collaboration of the private sector.
"We are going to create agricultural clusters in which the Federal Government will provide necessary inputs like water, power and transportation to support the large scale production of crops in which Nigeria has comparative advantage," President Yar'Adua told a gathering of investors in the Chinese capital.
In a press statement signed by his Special Adviser on Communications, Mr Olusegun Adeniyi, the President called for increased Chinese investment in Nigeria's agricultural sector. "This is one area where we are redirecting completely and you can benefit from our new initiatives," he said.
On power supply, President Yar'Adua said that his Administration had initiated urgent action to double Nigeria's current generation capacity by March next year and make power outages a thing of the past by the year 2011.
"By the year 2011, we hope to have overcome our power challenges so that we can successfully fast-track our economic growth. It is for this reason that we welcome the Chinese investors who want to partner with us on the use of coal as we explore all possible sources for additional power generation," the President said at the event which was hosted by the China Council for the Promotion of International Trade.
President Yar'Adua said that his Administration will grant concessions to new investors. "The concessions will be on a sectoral basis, especially for pioneer businesses, but we will not grant waivers or concessions to any investor on a preferential basis," he added.
He also told the gathering that his Administration was currently reviewing all relevant legislation to facilitate and fast-track the process of investment in the country, and that the Federal Government will introduce more investor-friendly monetary policies.
"My Administration is irrevocably committed to perpetuating the economic regeneration of Nigeria by boosting foreign direct investment in several sectors of our economy. These include oil and gas, agriculture, manufacturing, solid minerals, telecommunications, infrastructural development, power generation and distribution, and the financial and capital market sectors.
"Given their unique, respective geo-political statures, Nigeria and China have a duty to mutually reinforce each others' growth and development. Our Administration is greatly encouraged by the fast-track economic development that China has achieved, which has made her the world's fastest growing economy, and greatly enhanced her influence and stature in the world," he concluded.
President Yar'Adua also met with the Chairman of the National Peoples Congress of China Mr. Wu Bangguo before hosting representatives of the Nigeria Community in China at the Nigerian Embassy in Beijing.
Document AFNWS00020080303e43300106

FG to Build Metroline in Lagos, Abuja
by Juliana Taiwo

439 words

3 March 2008

09:08 AM

All Africa

AFNWS

English

(c) 2008 AllAfrica, All Rights Reserved
Abuja, Mar 03, 2008 (This Day/All Africa Global Media via COMTEX) -- President Umaru Musa Yar'Adua yesterday in Shangai, China promised that his administration will construct metroline projects in some major cities in the country, including Lagos and Abuja, to ease transportation problems in the areas.
President Yar'Adua, said his administration would welcome Chinese technical assistance for the successful execution of the projects.
The President said at the Shanghai Shentong Metro Company on the last day of his state visit to China that his administration was currently exploring options for financing the projects.
Special Adviser to the President (Communica-tions), Mr. Olusegun Adeniyi, in a statement quoted Yar'Adua as saying that: "We will be seeking your technical inputs very soon and I hope you will offer us the assistance we seek because we need to develop metro lines for some of our major cities like Lagos and Abuja to bridge the transportation gap.
"The main challenge is finance but once we have sorted that out, we will be getting back to you for technical support.
Adeniyi also disclosed that the Shanghai Shentong Metro Company operates the Shanghai Metro which is one of the world's newest and most rapidly expanding subway system with an average of 2.18 million passengers daily.
At the coal-powered Waigaoqiao Power Plant which he also toured with his entourage, according to the statement, Yar'Adua said the visit had further "emboldened" him in his determination to exploit Nigeria's vast coal deposits for the amelioration of the country's current problems with power generation.
"I am happy that some Chinese companies are ready to partner with us along this line. Our goal is to build a power plant like this as we look at all sources of power to meet our energy needs and reposition our economy," he said.
The President invited the Zong Xing Telecommunica-tion Equipment Company (ZTE) to invest in the production of mobile phone handsets in Nigeria and assured its Chief Executive, who accepted the invitation, that "the market is huge and will extend to the entire West African sub-region".
At one other stop before leaving for home, President Yar'Adua urged the Chinese company which participated in the launching of Nigeria's Nigcomsat to present proposals for the commercial exploitation of the satellite.
"I invite your company to have a stake in the project so that you can be involved in the maintenance as we take full commercial advantage of the benefits derivable from it," he said. The company has however accepted the offer.
Document AFNWS00020080303e433000xs
This Day (Nigeria) - AAGM: FG to Build Metroline in Lagos, Abuja.
Juliana Taiwo

438 words

2 March 2008

This Day (Nigeria)

AIWTHD

English

The Financial Times Limited. Asia Africa Intelligence Wire. All material subject to copyright. This Day (Nigeria) (c) 2008 All rights reserved
President Umaru Musa Yar'Adua yesterday in Shangai, China promised that his administration will construct metroline projects in some major cities in the country, including Lagos and Abuja, to ease transportation problems in the areas.
President Yar'Adua, said his administration would welcome Chinese technical assistance for the successful execution of the projects.
The President said at the Shanghai Shentong Metro Company on the last day of his state visit to China that his administration was currently exploring options for financing the projects.
Special Adviser to the President (Communica-tions), Mr. Olusegun Adeniyi, in a statement quoted Yar'Adua as saying that: "We will be seeking your technical inputs very soon and I hope you will offer us the assistance we seek because we need to develop metro lines for some of our major cities like Lagos and Abuja to bridge the transportation gap.
"The main challenge is finance but once we have sorted that out, we will be getting back to you for technical support.
Adeniyi also disclosed that the Shanghai Shentong Metro Company operates the Shanghai Metro which is one of the world's newest and most rapidly expanding subway system with an average of 2.18 million passengers daily.
At the coal-powered Waigaoqiao Power Plant which he also toured with his entourage, according to the statement, Yar'Adua said the visit had further "emboldened" him in his determination to exploit Nigeria's vast coal deposits for the amelioration of the country's current problems with power generation.
"I am happy that some Chinese companies are ready to partner with us along this line. Our goal is to build a power plant like this as we look at all sources of power to meet our energy needs and reposition our economy," he said.
The President invited the Zong Xing Telecommunica-tion Equipment Company (ZTE) to invest in the production of mobile phone handsets in Nigeria and assured its Chief Executive, who accepted the invitation, that "the market is huge and will extend to the entire West African sub-region".
At one other stop before leaving for home, President Yar'Adua urged the Chinese company which participated in the launching of Nigeria's Nigcomsat to present proposals for the commercial exploitation of the satellite.
"I invite your company to have a stake in the project so that you can be involved in the maintenance as we take full commercial advantage of the benefits derivable from it," he said. The company has however accepted the offer.
Distributed by AllAfrica Global Media. (allafrica.com)
FTDL62582896
Document AIWTHD0020080303e4320003a

Metro Line for Abuja, Lagos Soon - President Yar'Adua
409 words

2 March 2008

03:30 PM

All Africa

AFNWS

English

(c) 2008 AllAfrica, All Rights Reserved
Abuja, Mar 02, 2008 (Nigeria First/All Africa Global Media via COMTEX) -- President Umaru Musa Yar'Adua has disclosed that the Federal Government will soon embark on the development of metro lines for some of Nigeria's major cities and would welcome Chinese technical assistance for the successful execution of the projects.
The President, who made the disclosure on March 1st in Shanghai, China at the Shanghai Shentong Metro Company on the last day of his state visit to China, said that his Administration was currently exploring options for financing the project.
"We will be seeking your technical inputs very soon and I hope you will offer us the assistance we seek because we need to develop metro lines for some of our major cities like Lagos and Abuja to bridge the transportation gap" he stated.
He stated further "The main challenge is finance but once we have sorted that out, we will be getting back to you for technical assistance," the President told senior executives of the company".
The Shanghai Shentong Metro Company operates the Shanghai Metro, which is one of the world's newest and most rapidly expanding subway system with an average of 2.18 million passengers daily in 2007.
At the coal-powered Waigaoqiao Power Plant, which he also toured with his entourage, President Yar'Adua said that the visit had further "emboldened" him in his determination to exploit Nigeria's vast coal deposits for the amelioration of the country's current problems with power generation.
"I am happy that some Chinese companies are ready to partner with us along this line. Our goal is to build a power plant like this as we look at all sources of power to meet our energy needs and reposition our economy," he said.
The President invited the Zong Xing Telecommunication Equipment Company (ZTE) to invest in the production of mobile phone handsets in Nigeria, assuring its Chief Executive, who accepted the invitation that "the market is huge and will extend to the entire West African sub-region".
At one other stop before leaving for home, President Yar'Adua urged the Chinese company, which participated in the launching of Nigeria's Nigcomsat to present proposals for the commercial exploitation of the satellite.
He urged the company to have a stake in the project and be involved in its maintenance to maximize its commercial advantage.
The company accepted the offer.
Document AFNWS00020080302e432000m9

Nigerian president ends China tour
352 words

2 March 2008

06:31 AM

BBC Monitoring Asia Pacific

BBCAPP

English

(c) 2008 The British Broadcasting Corporation. All Rights Reserved. No material may be reproduced except with the express permission of The British Broadcasting Corporation.
Text of report in English by official Chinese news agency Xinhua (New China News Agency)
["Nigerian President Ends China Tour After Visiting Financial Hub in E.China" - Xinhua headline]
Shanghai, March 1 (Xinhua) - Nigerian President Umaru Yar'Adua left China's financial hub of Shanghai Saturday evening, concluding a four-day state visit to China, the first since he assumed office last May.
Yar'Adua said before leaving that he hoped Nigeria could become China's utmost trade partner in Africa in near future.