45 mortgage banks may not survive recapitalisation - MBAN

Indications have emerged that only 25 Primary Mortgage Institutions out of over 70 firms may survive the April recapitalisation deadline set by the Central Bank of Nigeria for the mortgage sector.

The President, Mortgage Banking Association, Mr. Abimbola Olayinka, said at a press conference in Lagos on Monday that merger talks were going on in the sector as 45 PMIs might not make the deadline.

He said, 'We have been on the recapitalisation issue for the past two years. The CBN has given the mortgage sector enough time. A lot of companies are going into merger; it should be a done deal between March and April. We will probably have 25 banks from the 70 banks we have now.'

Initially, the CBN had granted the mortgage banks a 12-month deadline from November 1, 2011, which terminated by December 12, 2012, but it was extended to April 30, 2013.

Under the fresh guidelines, mortgage firms have been categorised into national and state mortgage firms, while the National PMIs are allowed to operate in any or all parts of the federation after the payment of a new N5bn minimum paid-up capital, the state PMIs are restricted to only one state at the payment of N2.5bn.

Olayinka, who is also the Managing Director, Resort Savings and Loans Plc, said the company would float a N3bn offer at the Nigerian Stock Exchange subject to regulatory approval.

He said, 'The bank has been able to grow its deposit base from the N480m deposit liability as at 2009 to N2bn as at today. We will come out with an offer of N3bn. And with that, we will be positioned to deliver more mortgage finance and embark on big ticket projects throughout the federation towards delivering affordable housing.'

Olayinka said that the bank made N107m unaudited profit for the third quarter ending September 2012, adding, 'Our bank is positioned to go places; we will be 20 by the end of the year. We've grown from one single branch to about 13 branches/cash offices.'

He listed some of the challenges facing the mortgage sector to include- poor saving culture of the people; lack of long term investment by the people and lack of awareness of the mortgage bank in the society.

Others, according to him, are accessibility of affordable housing for all, problem of timely disbursement of the National Housing Fund, lack of low-cost, long-term financing; low confidence in the sector; absence of viable mass housing developers and difficulty in obtaining land titles.