History of Investment Banking in Nigeria
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Investment banking might not be as popular as it used to be but it
remains a crucial part of the financial system, especially in Nigeria.
Just like commercial banks serve their own designated function that is
depositing and lending funds, investment banks play a critical role in
the economy of Nigeria. This article is about the history of
investment banking in Nigeria. Here you will find what investment
banking is about and how this sector of banking has developed in
Nigeria.
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Read on below:
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Functions of investment banks in Nigeria
Investment banks act as intermediaries between security issuers and investors.
Investment banks arrange for mergers and acquisition of companies when
such consolidations become necessary by listing shares of companies
for sale
Investment banks facilitate bond sales for the federal government
Investment banks help organizations, corporations and government in
raising financial capital, by acting as the client’s agent
Investment banks also act as asset managers
Investment banks engage in market and equity research for higher
returns on investments
Investment banks act as financial advisors for private corporations
and governments on investments and transactions
Investment banks are the major participants in the financial market,
they act as intermediaries between the companies that want to sell
shares, and the investors or buyers of financial securities.
Investment banks earn their income through advisory fees and
commissions on transactions made for the government and other
organizations or companies. Investment banks basically operate in
capital markets, both in Nigeria and internationally. That is why upon
the collapse of the capital market and after the 2008 economic
meltdown, investment banks were the ones most affected. After the
crisis, investment banks became less lucrative as it used to be.
However, it still remains the best form of banking with its huge
capital investments and returns.
History of Investment banking
Before the advent of investment banking in Nigeria, there was another
form of banking called merchant banking which had been around in
Nigeria for a longer period of time. There is not much difference
between merchant banking and investment banking. As you have seen
earlier with the functions of investment banks, merchant banks also
provide funds and advisory services to organizations. Merchant banks
were originally set up to finance traders that is merchants. However,
with the later incoming of investment banks, the scope would later
expand with time.
From 1980 to mid-nineties, merchant banks were popular in Nigeria.
Activities of merchant banks were limited to assisting corporations
and governments in raising capital. They also were involved in
conducting a few mergers and acquisition activities.
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In the early eighties, Michael Subomi Balogun, a lawyer-turned-veteran
banker, started First City Merchant Bank. The bank, alongside others
like NAL Merchant Bank, later become the leading provider of merchant
banking services in Nigeria.
In 2000, when universal banking policy was implemented by the Central
Bank of Nigeria, First City Merchant bank obtained universal banking
license and rebranded to First City Monument Bank. This rebranding
also came with it becoming primarily a commercial bank, although still
retaining merchant/investment banking operations. This is because the
Universal banking license allows a bank to engage in all forms of
banking under a single license.
In 1989, a young man called Peterside Atedo who was born in Rivers
state- had come back from the United Kingdom where he had studied
Economics at the City University, London and the London School of
Economics and Political Science. He had been exposed to how investment
banking is done abroad. When he came, he saw that investment banking
in Nigeria was still primitive and realized it could be a fertile
opportunity for business. He set up a company he named Investment
Banking and Trust Company (IBTC). This was also around the time
licenses were issued to new commercial banks such as:
Zenith Bank founded by Jim Ovia
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Intercontinental Bank founded by Erastus Akingbola
Guaranty Trust Bank founded by Fola Adeola
Commerce Bank founded by Femi Adekanye
These banks were set up by equally young Nigerians who had worked in
other banks and decided to establish their own banks. Atedo decided to
be different and hence, looked the way of investment banking.
He began with a small office in Marina. Atedo gathered a couple of
other young professionals and started what would later become the
leading investment banking institution in Nigeria. The watchword of
the Investment Banking and Trust Company (IBTC) was integrity and
professionalism. By the end of the 20th century. the company had grown
to become the reference point of modern investment banking in Nigeria.
Its activities included merger and acquisition activities for
corporations and governments in raising capital and for other
restructuring exercises.
Banking Reform of 2004 and its effect on investment banking in Nigeria
The banking reform of 2004 by the Central bank of Nigeria focused on
bank consolidation through the mechanism of merger and acquisition.
This resulted in the rebasing of commercial banks from ₦2 billion to
₦25 billion which meant banks needed to have that amount before
going on with operations. The existing commercial banks were 89 at the
time, it then reduced to 25. In 2003, Investment Banking and Trust
Company (IBTC) was listed on the Nigerian Stock Exchange. The
consolidation policy at the time saw the company merge with Chartered
bank, a commercial bank. The enlarged IBTC-Chartered Bank was later
acquired by Standard Bank of South Africa and was rebranded as
StanbicIBTC.
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Today, the list of Investment Banks in Nigeria includes:Access Bank
Afribank
Associated Investment Trust Microfinance Bank Limited
Bank of Industry
Bank PHB
Bauchi Investment Corporation Limited
Central Bank of Nigeria
Citibank
Diamond Bank
Ecobank
Equitorial Trust Bank
Federal Mortgage Bank of Nigeria
Fidelity Bank
FinBank
First Bank of Nigeria QUEST ASSET MANAGEMENT
FIRST CITY MONUMENT BANK PLC
Guaranty Trust Bank
Intercontinental Bank
Mainstreet Corporate Banking
Oceanic Bank
Savannah Bank
Skye Bank
Société Générale Bank of Nigeria
Spring Bank
Stanbic IBTC Bank PLC
Standard Chartered Bank
Sterling Bank
Union Bank of Nigeria
United Bank for Africa
Unity Bank
Urban Development Bank of Nigeria
Wema Bank
Zenith Bank
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Investment banking might not be as popular as it used to be but it
remains a crucial part of the financial system, especially in Nigeria.
Just like commercial banks serve their own designated function that is
depositing and lending funds, investment banks play a critical role in
the economy of Nigeria. This article is about the history of
investment banking in Nigeria. Here you will find what investment
banking is about and how this sector of banking has developed in
Nigeria.
(adsbygoogle = window.adsbygoogle || []).push({});
Read on below:
(adsbygoogle = window.adsbygoogle || []).push({});
Functions of investment banks in Nigeria
Investment banks act as intermediaries between security issuers and investors.
Investment banks arrange for mergers and acquisition of companies when
such consolidations become necessary by listing shares of companies
for sale
Investment banks facilitate bond sales for the federal government
Investment banks help organizations, corporations and government in
raising financial capital, by acting as the client’s agent
Investment banks also act as asset managers
Investment banks engage in market and equity research for higher
returns on investments
Investment banks act as financial advisors for private corporations
and governments on investments and transactions
Investment banks are the major participants in the financial market,
they act as intermediaries between the companies that want to sell
shares, and the investors or buyers of financial securities.
Investment banks earn their income through advisory fees and
commissions on transactions made for the government and other
organizations or companies. Investment banks basically operate in
capital markets, both in Nigeria and internationally. That is why upon
the collapse of the capital market and after the 2008 economic
meltdown, investment banks were the ones most affected. After the
crisis, investment banks became less lucrative as it used to be.
However, it still remains the best form of banking with its huge
capital investments and returns.
History of Investment banking
Before the advent of investment banking in Nigeria, there was another
form of banking called merchant banking which had been around in
Nigeria for a longer period of time. There is not much difference
between merchant banking and investment banking. As you have seen
earlier with the functions of investment banks, merchant banks also
provide funds and advisory services to organizations. Merchant banks
were originally set up to finance traders that is merchants. However,
with the later incoming of investment banks, the scope would later
expand with time.
From 1980 to mid-nineties, merchant banks were popular in Nigeria.
Activities of merchant banks were limited to assisting corporations
and governments in raising capital. They also were involved in
conducting a few mergers and acquisition activities.
(adsbygoogle = window.adsbygoogle || []).push({});
In the early eighties, Michael Subomi Balogun, a lawyer-turned-veteran
banker, started First City Merchant Bank. The bank, alongside others
like NAL Merchant Bank, later become the leading provider of merchant
banking services in Nigeria.
In 2000, when universal banking policy was implemented by the Central
Bank of Nigeria, First City Merchant bank obtained universal banking
license and rebranded to First City Monument Bank. This rebranding
also came with it becoming primarily a commercial bank, although still
retaining merchant/investment banking operations. This is because the
Universal banking license allows a bank to engage in all forms of
banking under a single license.
In 1989, a young man called Peterside Atedo who was born in Rivers
state- had come back from the United Kingdom where he had studied
Economics at the City University, London and the London School of
Economics and Political Science. He had been exposed to how investment
banking is done abroad. When he came, he saw that investment banking
in Nigeria was still primitive and realized it could be a fertile
opportunity for business. He set up a company he named Investment
Banking and Trust Company (IBTC). This was also around the time
licenses were issued to new commercial banks such as:
Zenith Bank founded by Jim Ovia
(adsbygoogle = window.adsbygoogle || []).push({});
Intercontinental Bank founded by Erastus Akingbola
Guaranty Trust Bank founded by Fola Adeola
Commerce Bank founded by Femi Adekanye
These banks were set up by equally young Nigerians who had worked in
other banks and decided to establish their own banks. Atedo decided to
be different and hence, looked the way of investment banking.
He began with a small office in Marina. Atedo gathered a couple of
other young professionals and started what would later become the
leading investment banking institution in Nigeria. The watchword of
the Investment Banking and Trust Company (IBTC) was integrity and
professionalism. By the end of the 20th century. the company had grown
to become the reference point of modern investment banking in Nigeria.
Its activities included merger and acquisition activities for
corporations and governments in raising capital and for other
restructuring exercises.
Banking Reform of 2004 and its effect on investment banking in Nigeria
The banking reform of 2004 by the Central bank of Nigeria focused on
bank consolidation through the mechanism of merger and acquisition.
This resulted in the rebasing of commercial banks from ₦2 billion to
₦25 billion which meant banks needed to have that amount before
going on with operations. The existing commercial banks were 89 at the
time, it then reduced to 25. In 2003, Investment Banking and Trust
Company (IBTC) was listed on the Nigerian Stock Exchange. The
consolidation policy at the time saw the company merge with Chartered
bank, a commercial bank. The enlarged IBTC-Chartered Bank was later
acquired by Standard Bank of South Africa and was rebranded as
StanbicIBTC.
(adsbygoogle = window.adsbygoogle || []).push({});
Today, the list of Investment Banks in Nigeria includes:Access Bank
Afribank
Associated Investment Trust Microfinance Bank Limited
Bank of Industry
Bank PHB
Bauchi Investment Corporation Limited
Central Bank of Nigeria
Citibank
Diamond Bank
Ecobank
Equitorial Trust Bank
Federal Mortgage Bank of Nigeria
Fidelity Bank
FinBank
First Bank of Nigeria QUEST ASSET MANAGEMENT
FIRST CITY MONUMENT BANK PLC
Guaranty Trust Bank
Intercontinental Bank
Mainstreet Corporate Banking
Oceanic Bank
Savannah Bank
Skye Bank
Société Générale Bank of Nigeria
Spring Bank
Stanbic IBTC Bank PLC
Standard Chartered Bank
Sterling Bank
Union Bank of Nigeria
United Bank for Africa
Unity Bank
Urban Development Bank of Nigeria
Wema Bank
Zenith Bank
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jQuery(document).ready(function( $) { $.post(
'https://nigerianfinder.com/wp-admin/admin-ajax.php', {action:
'mts_view_count', id: '290327'}); });
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