Banking harmonisation in the African context

Regional Integration and the Private Authority of Banks in West Africa1

“…The major drivers of these expansions were the economic reforms, especially the privatization of state‐owned banks and financial deregulation that began as far back as the 1980s and 1990s in the region (Lewis and Stein 1997; Meagher 2003; Boone 2005). Cross‐border expansion has also been a response to the declining opportunities in domestic markets and regulatory factors, especially the opportunity for these nonstate actors to structure the regulatory regimes of new markets and products which governments lack knowledge of or capacity to regulate (Salami 2008; Lukonga and Chung 2010). For Ecobank and Nigeria’s UBA and Access Bank, for instance, the 2006 bank consolidation policy of the Central Bank of Nigeria (which significantly increased minimum base capital requirement from $15 million to $180 million pruned down Nigerian banks from 94 to 24); the limited opportunities in the domestic markets; and the embrace of the “global players” mantra were critical factors that propelled these banks to seek investment opportunities outside Nigeria.…”

“…Over the past two decades, West Africa's regional banks have expanded across borders in response to economic reforms (Lewis and Stein 1997;Reinhart and Tokatlidis 2003;Boone 2005) and declining opportunities at home (Salami 2008;Lukonga and Chung 2010). These cross-border movements have also been facilitated by commercial and non-commercial public-private partnerships targeting regional development, often involving extraterritorial rights and obligations similar to ''the market turn in EU governance'' (Mörth 2008).…”

“…The bank's subsidiaries are actually separate entities, even though most of the business lines are centralized. This complex structure renders it difficult for supervisors to have full understanding of the nature and extent of any relationship and transactions between the banks and with affiliates that may have an impact on the safety and soundness of the bank (Salami 2008;Lukonga and Chung 2010:17). Regulatory risk management of cross-border firms thus go beyond issues of legitimacy (Bernstein et al 2008;Mörth 2008) and highlight questions about ''public accountability'' both as a virtue and as a mechanism, where authority is exercised by private actors adopting rules and being involved in processes of implementation and enforcement (see Cutin and Senden 2011).…”