Lead Banking and Capital markets director Mr. Emilio Pera, at Ernst and Young, a global leader in assurance, taxi transaction and advisory services has charged Nigerian banks to learn a great lesson from a global financed crisis which had gradually affected most financial sectors.

Pera who stated this at a one-day seminar on “Risk Management in Financial Institution: Imperative for Stakeholders,” added that there are a number of lessons. The banks should have learnt from the recent crisis.

Pera in his paper entitled “Lesson from Change: Regaining Balance in the Insurance Industry, however noted that despite the recent turmoil in Nigerian banking, African banks have generally weathered the global financial crisis relatively well as banks across sub-Saharan Africa, with the possible exception of Nigeria, have not felt collapse on a major scale. While some banks have faced the effect of slowing revenue growth and reduced trading income, this has not led to the collapse of any of the major banking institutions,” he said.

He added that as a lasting solution to the crisis banks must acknowledge that liquidity risk is a crucial task area that has to be given more attention since prior to the outbreak of the financial liquidity crisis, banks tended to concentrate on three major risk categories, which are credit, operational and market risk.

“This is increasingly going to be complemented by a fourth risk category, namely liquidity risk. I can tell you that major banks including some South African institutions, have incurred losses from proprietary trading positions which proved difficult to unwind in an illiquid market”, he said. He added that the fact that some major Nigerian banks had to be rescued by Central Bank intervention is due to those banks building up significant portfolio of credit with direct exposure to equity markets.

“This meant that those banks had taken on significant market positions, knowingly or unknowingly, even if the banks were not themselves directly exposed to stock-exchange equities” According to him, a credit risk issue arose as a result of the action of banks in that too much credit was extended to equities resulting in concentration risk. But in addition to that, liquidity risk was in all likelihood overlooked, or at very least under-acknowledged.