(Reuters) – Nigeria’s Access Bank plans to grow its trade payment and settlement service over the next five years as foreign lenders faced with increased regulation at home cut their correspondent banking exposure to West Africa.
So-called correspondent banking operations boomed over the last decade as commodity prices spiked and offshore lenders looking to tap into trade flows to Africa extended lines of credit to governments and businesses.
But most are now scaling back as shaky African economies face low commodity prices creating payment hiccups, a gap which Access Bank is aiming to fill, the Nigerian bank’s chief executive Herbert Wigwe told Reuters.
But it would also need to upgrade its technology and compliance procedures, he said.
In October, Access posted group pretax profit of 72.91 billion naira, up 5.7 percent from a year earlier.
“Some countries in West Africa are becoming disintermediated. The large Western banks … as a result of (the) huge cost of compliance, they basically need to leave,” he told Reuters in an interview.
For example, foreign lenders have cut correspondent banking service in Gambia, Access Bank said.
On Friday, Barclays said it will end its more than 90-year presence in Africa after selling a seven percent stake in Barclays Africa to focus on the U.S. and Britain.
Offshore lenders cut back correspondent banking services to Nigeria in part due to a currency crisis caused by a sharp fall in oil prices mid-2014, while increased regulation at home and higher capital requirements have also proved problematic.
Wigwe said the Nigerian bank will inject $50 million into its Ghanaian unit to comply with a Ghana central bank directive.
Access shares, which has gained 70 percent this year, traded flat on Monday at 10 naira each, valuing the lender at 289 billion naira ($918 million).
The bank expects lending to retail customers to account for around 10 percent by 2022, up from less than 7 percent now.
Wigwe said Access would tap debt markets if necessary, but it will fund growth from cashflow and sees no need to raise equity.
Access is targeting 30 million retail customers over five years, from seven million now, as financial inclusion gains pace and technology slashes the cost of service delivery, he said. ($1 = 315.00 naira) (Reporting by Chijioke Ohuocha; editing by Alexander Smith)
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