• Friday, May 24, 2024
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BusinessDay

Subsidiaries delay HoldCo banks’ result

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The inability of subsidiary firms to quickly adopt to the new International Financial Reporting Standard (IFRS) reporting format is responsible for the delay in the release of 2012 financials by holding company (HoldCo) structured banks, BusinessDay investigations have revealed.

BusinessDay gathers that some of the banks are ready, but the need to carry all the subsidiaries along has become a Herculean task for them, which hitherto has been among the early birds.

FBN Holdings, Stanbic IBTC, UBA, FCMB, adopted the holding structure, with the holding companies having separate boards from the banks, and their subsidiaries as separate and independent entities, however reporting directly to the board of the HoldCo.

For instance, UBA, under the new structure was split into four standalone companies namely – UBA plc, UBA Capital plc, African Prudential Registrars plc and African Properties plc.

According to some analysts, the performance of the industry will be best appreciated when all the big banks release their financials. As of today, only Zenith Bank, GTBank, Access Bank, ETI, Sterling Bank, Fidelity Bank, and Skye Bank have released their IFRS compliant results.

Further investigations show that dearth of manpower within the subsidiaries coupled with

stringent requirements by some of the auditing firms for full disclosure are the major handicaps of the banks, resulting in delays in the release of their results.

IFRS are a set of accounting standards developed by the International Accounting Standards Board (IASB), which has become a global standard for the preparation of public companies financial statements, with the aim of providing a single set of high quality global accounting standards that require transparent and comparable information in general purpose financial statements.

It has the objective of bringing about convergence of national accounting standards for financial statements to give a true and fair view of the financial health of entities, and also develop a single set of high quality understandable and enforceable global accounting standards that require transparent and comparable information in financial statements.

The IFRS compliant financials have put most banks at loggerheads with the Central Bank of Nigeria (CBN) over the insistence by the latter for full compliance, a development that led to rejection of some banks’ results as falling short of the required open disclosure.

Johnson Chukwu, managing director, Cowry Asset Management Limited, said the need for harmonised financials with the subsidiaries might be responsible for the de

lay, saying “the implication is that the holding companies will have to ensure that all the subsidiaries are fully compliant before the release, unlike when they were operating independently under the defunct universal banking structure.”

Abdurahman Yenusa, executive director, Diamond Bank, told BusinessDay last week that the need for banks to adapt to the new methodology of the new reporting format had brought about the delay, as banks were careful not to make mistakes, being the first full year of FIRS compliant report.

For Friday Ameh, an analyst, “the time has come for banks to demonstrate the benefits of the reforms by being transparent, and this time around, the banks that opted for the holding structure must have to play the game according to the rules.”

 

JOHN OMACHONU