industry was characterised by weak corporate governance, declining ethics, demarketing of some banks and insider abuse. Many banks were heavily dependent on public-sector deposits. 494. The CBN, in collaboration with other institutions – such as the Nigeria Deposit Insurance Corporation (NDIC), the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) – embarked on a comprehensive programme to consolidate banks in order to address the weaknesses in the subsector. The programme ended in December 2005. By then, only 25 banks had met the minimum capitalisation requirements. Fourteen banks could not raise their capital base or merge with others. They were subsequently liquidated. 495. The CSAR mentions the following key effects of the programme: 25 relatively well-capitalised banks emerged; enhanced liquidity caused a fall in interest rates; improved intermediation efficiency of the banks led to a drop in the currency ratio outside the banking system from 21.4 per cent to 14.2 per cent by the end of December 2005; banks increased their capacity to finance big transactions with a single obligor limit; and bank ownership was diluted to increase banks’ potential to improve corporate governance. Furthermore, with larger economies of scale, customers stood to benefit from reduced bank charges. The oversight function of the SEC and the NSE has spread throughout the industry since almost all the banks are quoted. The Nigerian banking system is now the fastest growing in Africa. Two banks have successfully issued Eurobonds and some of the banks are on the verge of being listed on the London Exchange – a first for sub-Saharan Africa. 496. Overall, the CSAR believes that restructuring the banking subsector has had a positive impact on the financial health of banks. Nevertheless, in addition to its concerns about the large gap between the deposit and lending rates, it emphasises the need to address constraints in access to credit posed by overly burdensome collateral requirements. These obstacles, it argues, undermine potential growth of the real sector, particularly agriculture. Insurance-subsector consolidation 497. As with the banking reforms, the insurance-subsector reforms have concentrated on strengthening the capital base of registered insurance companies by raising capital requirements. Life insurance companies had the previous capital requirement of N150 million moved up to N2 billion, general insurance companies had it increased from N200 million to N3 billion, and reinsurance companies had the previous capital minimum of N350 million increased to N10 billion. 498. The reforms caused most firms to merge, while others were forced to liquidate because they could not meet the new capital requirements. Before recapitalisation, there were 107 insurance companies in Nigeria. This number declined substantially to 71 by the end of the programme. While the CSAR is optimistic that these measures will enhance the global competitiveness of Nigerian insurance companies, it nevertheless cautions that the insurance culture in Nigeria is still nascent and the industry remains relatively underdeveloped. 155