UPDATE 2-Global banks HSBC and UBS close offices in Nigeria, foreign investment drops

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* Three local lenders fail liquidity test

* Foreign direct investment fell by 29% in the first half of the year

* Economic outlook overshadowed by 2019 election fears (adds details on bank liquidity tests)

LAGOS, Nov. 2 (Reuters) – HSBC and UBS have closed their offices in Nigeria, the country’s central bank said in a report on Friday, revealing that foreign investment fell sharply from a year ago.

The bank said foreign direct investment in Nigeria fell to 379.84 billion naira ($ 1.2 billion) in the first half of the year, from 532.63 billion naira ($ 1.7 billion) a year earlier. early.

He did not give the reasons for the bank closings.

HSBC was not available for comment and UBS declined to comment.

The central bank said the outlook for the Nigerian economy in the second half of the year was “optimistic” given rising oil prices and production, but rising external debt and uncertainty surrounding the presidential election of 2019 were a downside.

Investor confidence in the West African country has been shaken since the central bank in August ordered MTN to bring the country $ 8.1 billion, part of the profits the South African company telecommunications sent abroad.

An HSBC research note dated July 18 said that a second term for Buhari “increases the risk of limited economic progress and further fiscal deterioration, prolonging the stagnation of his first term, especially if there is no is no movement towards the completion of the exchange rate system reform or budget adjustments. that diversify government revenues away from oil. “

LOAN LOSSES

The central bank also said that three lenders failed to meet its minimum liquidity ratio of 30%, without naming them.

He added that nonperforming loans (NPLs) had fallen to 12.4% in June 2018 from 15% a year ago, still well above its threshold of 5%.

“To further consolidate this improvement, the Central Bank of Nigeria has asked banks to step up their debt collection efforts, provide guarantees for lost facilities and strengthen their risk management processes,” he said. stated in the report.

In September, the regulator withdrew the license from Skye Bank for failing to recapitalize. She then transferred the assets of Skye to a Polaris “bridge bank” wholly owned by state-backed asset management company AMCON.

Nigerian banks are trying to raise new capital after huge loan losses made worse by an economy just emerging from a recession.

The Diamond Bank last week denied it was in talks with investors to raise liquidity, but said it was managing its capital, which is near the regulatory minimum, to grow.

Another lender, Unity Bank, has sought to raise new funds to recapitalize. ($ 1 = 305.5500 naira) (Report by Chijioke Ohuocha edited by Raissa Kasolowsky and Elaine Hardcastle)

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