The former chief executive of one of Nigeria's biggest banks has warned the sector faces its own potential subprime-style crisis. Jacob Ajekigbe, former CEO of First Bank of Nigeria, told the Chartered Institute of Bankers of Nigeria that the credit crunch in developed markets had led to a reduction and repricing of credit lines by foreign banks. If not managed well, this could have severe consequences. Nigeria's banks have boomed in the past four years as a result of consolidation in the sector, big foreign investment and a buoyant, oil-driven economy. But the recent drop in the price of oil, a sharp fall in investment from foreign banks and a collapse in the Nigerian Stock Exchange has sparked concerns over the stability of the sector. Mr Ajekigbe said falling oil prices would translate into dwindling revenue for the government - which in turn meant fewer deposits for the banks, all of whom depend on the public sector for the bulk of their liabilities.
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