Wednesday, January 9, 2008

Can you trust the First Bank of Nigeria?

No this isn't a Nigerian 419* scam. Some day it might be looked back on as an object lesson in chasing yields**. I liked the headline.
From thisismoney:

A Nigerian bank may not be the first to spring to mind when looking for a safe and profitable home for your money, but UK savers should be advised to take note.

The UK subsidiary of First Bank of Nigeria has been offering a suite of table-topping savings accounts since July of last year and – following pressure from This is Money – has pledged to make them more attractive by adding rate guarantees.

However savers may still be deterred by the association with a nation whose banking and political systems have been widely deemed corrupt.

First Bank's rates compare favourably to the best in the industry but, performance aside, would you be wise to deposit your money with it?>>>MORE

*Wikipedia has a nice suite of variations here.
**One of my mentors, and one of the sharpest traders I ever met, had the most common flaw of students of markets, hubris. In his case it was non-fatal, more of a cost of doing business:
1) He had somehow ended up with some of the
Boston Chicken-Einstein/Noah bagel bonds. We know how that worked out:
...Short-sellers got teary-eyed this week following word that old faithful Boston Chicken (Nasdaq: BOST) finally bit the Chapter 11 bankruptcy dust. Though hardly unexpected, Monday's announcement dropped the stock to $0.50 a share, down an astonishing 97% from its 52-week high near $16.
Source (scroll to "A Chicken Autopsy")
He knew it was a finance scam "but the debentures paid 11%"

2) He got into a rigged blackjack game in Yugoslavia. Lost half-a-mil. Said he started to think it was was fixed when he was down a couple hundred.
Wife: "Then why the hell did you keep playing?"
Him: "I thought I could beat it".