Quote by adigun10

well,
all i can say is NIGERIANS WAKE UP, TAKE A LOOK AT THE BIG PICTURE!!
okay chase debtors, get the money nice, but couldnt he have give these directors a warning and time to get this so called debts?is the only reason for this take over? yes, i said TAKE OVER, because that is what it is!!

They had a chance since October 2008 to clean up the mess, that is why Soludo opened the EDW (Expanded Discount Window). But form what Sanusi said things were not getting better it was getting worse.

If he had not taken action, it might not affected only the 5 banks but the small banks will be affected. Why? The small banks will not have been a able to take back in the inter-bank market because of the high interest rate (small banks do not have the assets to borrow at a high interest). In the U.S you will notice it is mostly the small banks that are dying, the U.S unlike Nigeria can afford that because they have more than 800 banks.

Where in the world do u appoint a new Central bank governor, within the same month conduct a review on selected banks (basis of selection no one knows), sack the MDs of those banks (based on the undiscussed result of the examination), inject unneeded funds and within the same month start shopping for new sets of owners for the banks?

I ve one word for the above 'Witch Hunting'

biina:

This is hilarious.
A bank found guilty of doctoring its books should be given time to disclose its real situation.
If the banks had any genuine intention of accurate reporting, would they have been cooking the books?
Was the audit not carried out to determine the real situation of the said banks?
or the CBN should ignore the findings of their audit and instead rely on the 'real situation' disclosed by the banks?

No one said that they should ignore their finding but that of the banks should not be ignored as well especially as a fallout of their audit. It is just like a policeman catching a criminal red-handed and saying that theres no need to charge him to court.
And then the CBN not caring  to hear out the defense of these banks. Is that a credible/civil manner to tackle the problem?

So while you admit that the Banks are beyond the MDs, yet you propose as a solution that the board simply remove the MD? All the while depositors funds are continuously being mismanaged.

You seem to forget that the board of directors and shareholders have a bigger stake in this whole issue. And I proposed this as a one of the possible steps that could have been exhausted before a careless and reckless actions of sacking MDs from the central bank. Where do you think you are! This is a free market economy. Moreover this is not NNPC or Nitel. Nigerians should be more responsible when it comes to coporate practice and due process in their actions especially when it is coming from government.

Given the dire situation of said banks, Sanusi was lenient in not withdrawing their licenses and closing them down.
The CBN and the Bank in question, as they are in the best position to determine if a bank is insolvent. The NBA president has no idea of what he is talking about, and has to rely on second hand information like the rest of us. This is not a court case. The CBN is carrying out its supervisory role and thus there is no issue of fair hearing.

I can see you are very inconversant with the coporate world. Throughout history companies fail as a result of not being able to meet the financial obligations of their creditors and investors. The banks still have the option of raising funds independently which havent even been exhausted. The CBN cannot just seize their licences just because they determined that they are insolvent especially if the MDs and board of directors dont agree. This is not dictatorship my friend, this is an open market economy. Mind you close to insolvency as determined by one party does not exacly mean insolvency especially to the affected party.

The CBN have carried out their audit and published evidence of their findings. The CBN does not have jurisdiction over the auditors. The banks and their auditors, have not come out with any evidence in support of their innocence, and yet you want us to worry about a possible contradiction in court?

But the auditors have a legal liability to the banks. If evidence of missappriopriations are found, and the auditing firms found guilty of being complicit, the CBN has the power to at least initiate proceedings against them and invite them for clarification. You cannot sieze or liquidate a company without the involvement the companies auditors/ accountants. Go and find out !

Some of us non bankers and non-financial gurus already feel giddy from all the high tech banking jargons been thrown around in this thread.
But still, from the point of view of someone who lives in Naija and has seen these games played over and over again,
Sanusi's actions reeks of good ole hidden agenda.

No doubt the 5 bank's are not operating above level, but you don't kill a fly with a sledge hammer.
Above all there are laid down procedures for taking actions against corporate entities (like banks) as already stated in this thread.

The really freakishly scary part is that all these  actions by Sanusi had been predicted by some papers about 3 months ago.
All the correct grammar in this world cannot erase the asphyxiating smell of conspiracy surrounding this appalling high handedness.

Yes, thank you, I know my contribution sounds pedestrian coming after all the above display of banking lexicon.

But still, if all these Sanusi apologists where somehow out to convince just only me, then they have an arduous uphill task.
What the wise sees while sitting on a stool cannot be observed by haughty ones standing on a tree

gReenmAn:


The really freakishly scary part is that all these actions by Sanusi had been predicted by some papers about 3 months ago.

That Vanguard article being bandied around collapses when faced with a similar 'prophetic' article by BusinessDay.
Did you know that BusinessDay also predicted this crisis more than three months ago:

http://businessdayonline.com/index.php?option=com_content&view=article&id=4671:who-saw-the-bank-crisis-coming&catid=123:special-report&Itemid=361

Isn't it funny how you guys ignore a more informed prediction by Businessday whose sole business is analysing and reporting the financial system and the economy as a whole.

Special Report
Who saw the bank crisis coming?
MONDAY, 24 AUGUST 2009 01:24 MAX AMUCHIE
In a much celebrated article entitled: ‘The Agenda-Setting Role of the Mass Media in the Shaping of Public Opinion’, Maxwell McCombs, a professor at the University of Texas, Austin, United States notes: “The power of the news media to set a nation’s agenda, to focus public attention on a few key public issues, is an immense and well-documented influence. Not only do people acquire factual information about public affairs from the news media, readers and viewers also learn how much importance to attach to a topic on the basis of the emphasis placed on it in the news. Newspapers provide a host of cues about the salience of the topics in the daily news – lead story on page one, other front page display, large headlines, etc. Television news also offers numerous cues about salience – the opening story on the newscast, length of time devoted to the story, etc. These cues repeated day after day effectively communicate the importance of each topic. In other words, the news media can set the agenda for the public’s attention to that small group of issues around which public opinion forms.”
The principal outlines of this influence had been sketched as far back as 1922 by Walter Lippmann in his work, ‘Public Opinion’. According to Lippmann, the news media are a primary source of pictures in our heads about the larger world of public affairs, a world that for most citizens is “out of reach, out of sight, out of mind.”
One can therefore appreciate the critical role of the media as the fourth estate of the realm, a tag that has stuck since Edmund Burke, the 19th century British parliamentarian and political philosopher assigned the fourth position to the media in a realm that comprises the executive, the legislature and the judiciary in that order. What we know about the world is largely based on what the media decide to tell us. More specifically, the result of this mediated view of the world is that the priorities of the media strongly influence the priorities of the public. Elements prominent on the media agenda become prominent in the public mind. If the media fail, the society is doomed. In BusinessDay this is taken seriously.
The agenda of a media house is found in its pattern of coverage of public issues over some period of time, a week, a month, an entire year. Over this period of time, whatever it might be, a few issues are emphasised, some receive light coverage, and many are seldom or never mentioned. It should, however, be noted that the use of the term ‘agenda’ here is purely descriptive. There is no pejorative implication that a media house like BusinessDay ‘has an agenda’ that it relentlessly pursues as a premeditated goal. The media agenda presented to the public results from countless day-to-day decisions by BusinessDay journalists and board of editors about the issues of the moment.
The beginning of this year presented a clear picture of the shape of things to come and BusinessDay seized it and foresaw the sequence of events that culminated in the sack of five chief executive officers of Nigerian banks on Friday, August 14.
For five days, February 16 to 20, BusinessDay ran a series on the Nigerian banking sector. It was a time that there was anxiety and excitement over the reappointment or otherwise of the former governor of the Central Bank of Nigeria, Chukwuma Soludo. The professor of economics was appointed in 2004 and his coming led to consolidation in the Nigerian banking industry, an exercise that saw banks move their capital base from a paltry N2 billion to a minimum of N25 billion.
Initially, the move was criticised, but when at the end of 18 months period 25 banks scaled the huddle, consolidation was hailed as the best thing that had happened to the Nigerian banking industry.
[b]However, for keen observers and for BusinessDay board of editors, there were challenges and miscues that needed to be addressed, questions that needed urgent answers and measures that needed to be taken to steer the Nigerian banking sector away from a path of destruction.[/b]It has become public knowledge since the landmark decision of the sack of the five CEOs on August 14 that the huge debts totaling more than one trillion naira that crippled the five banks had to do with loans related to the capital market and the oil and gas sector.
The present governor of the CBN, Sanusi Lamido Sanusi, while announcing the decision to sack the five managing directors, attributed the crisis in the banking sector to a failure of regulation over time. Long before then, BusinessDay had recognised the nexus between the margin loan crisis and weak regulation.
The paper’s lead story on Tuesday, February 17, 2009, was entitled: ‘How regulatory failure created margin loan crisis’. BusinessDay wrote: “A failure of regulatory oversight by the monetary authorities, charged with the responsibility to monitor and supervise how banks lend and disburse loans in the financial system, has been identified for the massive margin loan crisis hanging over the banking industry.
“The banking regulator, the Central Bank of Nigeria (CBN) is believed to have taken its eye off the ball while a number of banks moved recklessly into the capital market to perpetrate unwholesome practices designed and calculated to shore up the value of their shares in the capital market.”
We further went to report that the CBN only moved to play its oversight role after the crisis had deepened, and even when it did, its measures were targeted at general monetary concerns.
The next day, BusinessDay’s lead story was ‘Outrage as CBN lends to some banks at 11 percent’. The story reads: “The Central Bank’s expanded discount window through which it acts as lender of the last resort to the nation’s banks was opened a bit wider some months ago but access was initially fixed at an outrageously low eleven percent per annum.
“Almost a trillion naira was extended to the banks since September when access through the window was eased but some bankers thought it was unwise and indeed curious that the Central Bank will extend credit to banks at eleven percent interest rate at a time when deposits could command as much as 16 or even 17 percent.
“Expectedly a deluge of requests came in from the banks, some simply because they could not just sit there watching their competitors profit from a seemingly unusual handout from the lender of last resort.”
The story quoted a banker who said: “All over the world, when you reach out to the lender of last resort, what you get is at a premium. But here banks were to all intents and purposes being rewarded instead of being punished.”
On page 53 of the same edition, we ran a story entitled, ‘With blurred supervision, banks are back to cooking the books’. In the story, BusinessDay writes, “Declarations of bogus profits and failure to disclose toxic assets have crept into Nigeria’s banking system. And analysts, worried by the trend, say banking in the country has gone back to the old days when banks kept more than one statement of account for different purposes.“But the understanding of many was that the Central Bank of Nigeria would be up to the task of supervising and discouraging banks from cutting corners. Information reaching BusinessDay indicates that the apex bank may have been looking the other way while banks cheated their shareholders of billions of naira.”
On Thursday, February 19, 2009, BusinessDay came out with a lead headline ‘CBN’s lax supervision set stage for irregular financial reporting’. According to the report, CBN’s laxity in effectively monitoring financial reporting by banks had put it at daggers drawn with Nigerian Accounting Standards Board (NASB) charged with the task of ensuring compliance with set standards of financial reporting in Nigeria which is in line with international accounting standards.
For instance, according to the story, analysts expressed surprise over lack of details by the banks which supply only basic information as profits, earnings, shareholders’ funds at the exclusion of important details such as unsecured consumer credits, trade finance exposure, equity markets risk, corporate lending risk, sovereign fixed income as well as significant potential for foreign currency risk as point of large scale asset and liability transactions with international counterparts.
And on Friday, February 20, 2009, the last day of the series, which was three months ahead of the end of the tenure of Soludo as CBN governor, BusinessDay predicted that he would not be reappointed and took the public through reasons he was unlikely to get a second term in office.
Quoting an advisory by Eurasia, the leading political risk research and consulting firm based in New York, the United States, BusinessDay catalogued a number of CBN’s policy somersaults, condescending statements talking up the economy and flip-flops which together with other issues have helped to dent Soludo’s chances of re-appointment.
The report reads: “Soludo’s current five-year tenure ends in May. While Soludo gained widespread international respect for his leadership in pushing banking sector reforms and a massive consolidation of the Nigerian banking system under the Obasanjo administration, his recent miscues on the direction of inflation and currency policy have left his much vaunted credibility damaged. Whoever replaces Soludo from Yar’Adua’s inner circle is likely to be more strongly market interventionist than Soludo, who had until recently been fairly neo-liberal in his policies.”
Since Sanusi sacked Erastus Akingbola of Intercontinental Bank, Cecilia Ibru of Oceanic Bank, Okey Nwosu of FinBank, Barth Ebong of Union Bank and Sebastian Adigwe of Afribank, it has become public knowledge that they were the main beneficiaries of the controversial expanded discount window, had cooked books to hoodwink the public and their shareholders and exposure to margin loans. BusinessDay foresaw the present crisis and faithfully discharged its responsibility to the public, but nobody, not even the authorities paid attention.

I am sitting on the fence on this issue and here are my reasons:
1. Sanusi acted well, cos if nothing has been done, then, the fall of those banks would have send Nigerian on a tail spin and might never recover from it, cos those 5 banks are not just childish play.

However, sounds fishy that he never waited to audit all the other banks and drop the axe on them all at once, and not audit some, drop axe and then, audit the rest, i dont think that was a great way of dealing with it.

2. Sanusi is a risk analyst and i am sure he knows the risk in what he has done, so why doing it when the time wasn't ripened.

Vanguard also stated that 2 deputy governors were fired. But what vanguard failed to tell the readers was that those two people are not [/b]deputy governors they are only members of the board,[b] big difference. And the Federal government decided to change the whole board except one member is returning (Tunde Lemo)

No one can deny the fact that the Vanguard report was spot on. It was an obvious case of insider information.

I am a 95% sure that this whole drama being played out is a well written script by a few Nigerians.

Fhemmy

It would be foolhardy of Sanusi to wait. Erastus and co had friends in CBN who would continue to hint them of every move. Erastus, for one, already had premonitions of what was coming. He started lobbying around, trying to checkmate CBN's moves.

Besides, if you wasted more time, these guys would tamper with evidences and stuffs in the system.

The same reason applies to the issue of ''giving them fair hearing''. If the audit team disclosed their findings to the banks' managements in form of queries etc, it would give these mismanagers leeway to distort records and also frustrate CBN's actions.

Something similar to this happened in 2002, during the Foreign exchange round tripping scam. The banks were suspended from FX trading, which dealt serious blow on them, as most of them depended so much on revenue from FX.

That exercise, to me , was not thorough enough, as most of the collaborators were let off the hook. Most of the banks even destroyed documents to hide their dealings. Only few MDs were asked to resign, quietly, and in most cases, the real culprits are still in the banks today.

If that 2002 issue was decisively addressed, it would probably deter bankers from engaging in other malpractices, as witnessed today.

ThinkRait:

I read BusinessDay's predictions as well as Vanguard's. If any Nairalander want me to agree with BusinessDay's, I see no reason why I should not agree more with Vanguard's since they spelt out details and modus operandi.


@OYB_MEND, Jarus, biina, adigun101

You argue at though you have all the facts. Relax, the truth will come out. This one cannot be swept under the carpet.


Jarus, please comment on the Vanguard's publication of March 2009, long before Sanusi was appointed.

Jarus, I'm waiting for your defense.
I'm dont want to take sides so peopleeee pleeeeeeasse argue with Evidence.

fyneguy:

Fhemmy

It would be foolhardy of Sanusi to wait. Erastus and co had friends in CBN who would continue to hint them of every move. Erastus, for one, already had premonitions of what was coming. He started lobbying around, trying to checkmate CBN's moves.

Besides, if you wasted more time, these guys would tamper with evidences and stuffs in the system.

The same reason applies to the issue of ''giving them fair hearing''. If the audit team disclosed their findings to the banks' managements in form of queries etc, it would give these mismanagers leeway to distort records and also frustrate CBN's actions.

So you mean CBN will justify this rash behavior  in court by the explanation you have given?

I laugh ,  hmmmm

Jarus, please comment on the Vanguard's publication of March 2009, long before Sanusi was appointed.

Vanguard has the right to do any investigation and come up with any thing. I don't have any problem with that, whether it's true or false. In fact, I'm not ruling out the possibility of the north having any agenda, but what I can put my money on is that Sanusi cannot be a pawn in the northern oligarchs' political chess game. Sanusi is the last person they can use to hatch such idea.
Sanusi doesn't see eye to eye with these northern ruling class before. In fact they were initially against his choice by Yar'adua because he was regarded as being the bad boy of the north and too liberal. He had had clashes with almost everybody that mattered in the north before, from ACF to IBBs to the Emirs and even to Islamic scholars. I even wondered how he combined radical activism with banking job.

Furthermore, in a recent interview, he recalled how he was approached by the northern elites(being one of their top bankers) after consolidation that their bank, Bank of the North(owned by the 19 northern states) had been swept away and he told them 'look, you had no bank, if your bank was good enough, it would have scaled the recapitalization hurdle' summarily telling these northern elites off.

Therefore, I refuse to accept the claim that Sanusi is acting anybody's script. It's like saying somebody like Gani Fawehinmi is acting one Yoruba script.

Mind you, I'm not saying that vanguard article may not have an iota of truth, but what I'm sure of is that Sanusi's actions are absolutely independent of the so-called 'plans' put in that article. Sanusi is doing what he personally feels is the way to go about the mess in the financial system.

On the BusinessDay article, I accept it because it is based on facts and everything Sanusi is saying now have all been said by the newspaper in February 2009.

na_so:

So you mean CBN will justify this rash behavior  in court by the explanation you have given?

I laugh ,  hmmmm

Na so,

Just wait and see the way things will play out in court. All CBN needs to do is present the banks' official reports and CBN's audit report.

If a bank claimed its non-performing loan was N7 billion and CBN audit revealed N68 billion, what fair hearing are you asking for?

hmmm,

when noah in the bible spoke about God's plan of a flood to wipe out the earth and only those that got into the arch would survive it, no one believed him;they called a fool and a noise maker, right?until it was too late?

NIGERIANS, WAKE UP AND SMELL THE COFFEE!!

This is a no brainer the five banks in question overexposed themselves by heavilly financing the Capital market and the OIL & Gas industry. With the crash of the Capital Market and Oil Prices their liquidity problem started. Lenders were not paying their loans on time and their CAR % fell below the acceptable 10%.

That provided an opportunity for people with agendas to take ownership of the banks.

The Executives of the bank are responsible for the poor risk management of the bank. CBN injects capital into the banks, and sell there share to Local and International Investors.

These can provide an opportunity for people that lost out in the consolidation process of Solodo to use this opportunity to become sizeable owners of these Banks.

Jarus:

Vanguard has the right to do any investigation and come up with any thing. I don't have any problem with that, whether it's true or false. In fact, I'm not ruling out the possibility of the north having any agenda, but what I can put my money on is that Sanusi cannot be a pawn in the northern oligarchs' political chess game. Sanusi is the last person they can use to hatch such idea.
Sanusi doesn't see eye to eye with these northern ruling class before. In fact they were initially against his choice by Yar'adua because he was regarded as being the bad boy of the north and too liberal. He had had clashes with almost everybody that mattered in the north before, from ACF to IBBs to the Emirs and even to Islamic scholars. I even wondered how he combined radical activism with banking job.

Furthermore, in a recent interview, he recalled how he was approached by the northern elites(being one of their top bankers) after consolidation that their bank, Bank of the North(owned by the 19 northern states) had been swept away and he told them 'look, you had no bank, if your bank was good enough, it would have scaled the recapitalization hurdle' summarily telling these northern elites off.

Therefore, I refuse to accept the claim that Sanusi is acting anybody's script. It's like saying somebody like Gani Fawehinmi is acting one Yoruba script.

Mind you, I'm not saying that vanguard article may not have an iota of truth, but what I'm sure of is that Sanusi's actions are absolutely independent of the so-called 'plans' put in that article. Sanusi is doing what he personally feels is the way to go about the mess in the financial system.

On the BusinessDay article, I accept it because it is based on facts and everything Sanusi is saying now have all been said by the newspaper in February 2009.

I know absolutely nothing  (other than what the newspapers says) about what is going on, that is why I would not take a stand for or against.

Sanusi might be acting a script, but if the script is for d good of our Country, I'm in full support.
If this script will take Nigeria seven steps backward, I'll be against it.

Time will tell.

@Jarus,
You cant be too sure of the intentions of anybody. You cant trust anybody with your life.
Objectivity is one habit every well meaning Nigerian should try to cultivate. U are sometimes objective and sometimes subjective. The last two highlighted sections shows an example of this.
U accepted the BusinessDay publication as fact because it supports your point of view. In the case of Vanguard, u used the word 'may'. No be so oh!!

I don't support Sanusi's actions on the banking sector. There were other ways to reprehend to the actions of the bank executives rather than embarrassing them publicly. These were individuals who have been in the banking sector for a very long time and have steered the various banks through both good and bad times. Sanusi is a banker, so are the others, I just can't help but believe that sanusi has personal issues with these bankers.
And of what need is the injection of 400 billion into these banks, when there debtors are already beginning to pay their debts.

@Jarus
Why the obssession with comparing the Vanguard, March 2009 article with Businessday review?

naijaking1:

@Jarus
Why the obssession with comparing the Vanguard, March 2009 article with Businessday review?

Why the spamming of the thread with Vanguard article?
Vanguard article does for you anti-Sanusi what BusinessDay does for us pro-Sanusi. You counter reference with reference, that is the way to argue.

The CEO of Union Bank was about to retire from the banking profession before Swanusi toppled his career. Was that necessary?

I do approve if he is doing the right thing according to the laws and constitution of Nigeria.

I don't support it one bit

Crude Oil:

The CEO of Union Bank was about to retire from the banking profession before Swanusi toppled his career. Was that necessary?

Nigerian are just shocking. So after mismanaging depositor's funds, the guy should have been allowed to retire in peace?
whats next? After a politician is found to have rigged his way into office and/or embezzled money in office, we should allow him to finish his tenure in peace?

Crude Oil:

I don't support Sanusi's actions on the banking sector. There were other ways to reprehend to the actions of the bank executives rather than embarrassing them publicly. These were individuals who have been in the banking sector for a very long time and have steered the various banks through both good and bad times. Sanusi is a banker, so are the others, I just can't help but believe that sanusi has personal issues with these bankers.
And of what need is the injection of 400 billion into these banks, when there debtors are already beginning to pay their debts.

so what do u suggest? executives that have been doctoring their books should be left in office? after mismanaging depositors funds and putting the finacial sector at risk, they should be asked to quietly resign? Its saddening that you expect people that are embezzlers to be treated with dignity. Would you ask same of a market thief? cos these guys are no different.

The 400 billion was to guarantee depositors funds and forestall panic withdrawal based on fears of the bank going under. Once the banks have recovered substantial parts of their loans, CBN will be able to withdraw said capital. Publishing of the list was to help bring pressure on the debtors to pay (and seems to be working).  As a regulatory body, CBN has no business buying shares in the bank, and would rather withdraw the banks license.The current management is only interim and is supposed to help right the bank.

Xavier.:

Where in the world do u appoint a new Central bank governor, within the same month conduct a review on selected banks (basis of selection no one knows), sack the MDs of those banks (based on the undiscussed result of the examination), inject unneeded funds and within the same month start shopping for new sets of owners for the banks?

I ve one word for the above 'Witch Hunting'

The 5 banks were suspected and subsequently audited because of their interbank activities, in which 4 were persistent borrowers and showed no signs of being able to fulfill their obligations, while the 5th was borrowing more than would be expected of it based on its filings. Said four banks have also (under the banner of the CBN interbank guarantee) continued to borrow from other banks, essentially putting the entire sector at risk. At the end of July, those 5 banks were responsible for 90% of the outstanding loans in the EDW, and they owed the interbank market N250BN+

Since the books of said banks were not found to be inline with the truth of their performance i.e. they have been doctoring their books, what would you have the CBN do? leave the same executives in office?

If staff of your company was doctoring the books what would you do? promote him?

adigun101:

No one said that they should ignore their finding but that of the banks should not be ignored as well especially as a fallout of their audit. It is just like a policeman catching a criminal red-handed and saying that theres no need to charge him to court. And then the CBN not caring  to hear out the defense of these banks. Is that a credible/civil manner to tackle the problem?

Hear their defence? Their fair hearings were the filing they have been making to the CBN which have been discovered to be false. Again this is not a case in the court of law. The CBN is the regulatory body. The banks had their chance and showed no intention of coming out with the truth, before or after the CBN hearing. The findings of the banks should be ignored as they have been falsifying them in the past. The audit was to help the CBN find the truth, and here you suggest that they retrogress back to the lies.
So lets say the banks' present findings are contrary to the CBN's, what would you have happen then? go to court? sorry, but is not a judiciary matter.

You seem to forget that the board of directors and shareholders have a bigger stake in this whole issue. And I proposed this as a one of the possible steps that could have been exhausted before a careless and reckless actions of sacking MDs from the central bank. Where do you think you are! This is a free market economy. Moreover this is not NNPC or Nitel. Nigerians should be more responsible when it comes to coporate practice and due process in their actions especially when it is coming from government.

The most important stake holders to the CBN are the depositors and the public. Shareholders are secondary and that is why when a bank fails depositors are paid off before shareholders.

Do not abuse phrases like 'free market economy'. The banking sector is not a free market, but rather under the regulation of the CBN and thus cannot be left to 'free' run.

Executives in the sector have acted inappropriately, and the CBN has moved to duly remove them. Shikena.

I can see you are very inconversant with the coporate world. Throughout history companies fail as a result of not being able to meet the financial obligations of their creditors and investors. The banks still have the option of raising funds independently which havent even been exhausted. The CBN cannot just seize their licences just because they determined that they are insolvent especially if the MDs and board of directors dont agree. This is not dictatorship my friend, this is an open market economy. Mind you close to insolvency as determined by one party does not exacly mean insolvency especially to the affected party.

Again the banks have not been closed down, only that their executives guilty of mismanaging depositors funds, and sharp practices have been removed. Would you rather they be left in office to continue the dastardly act until the bank goes under (even though if the audit has already revealed that they are insolvent). Its like saying we should allow a Ponzi scheme to continue, cos it hasn't failed yet?
Insolvency is determined by the CBN as they are the regulatory body. If CBN says you are insolvent, then you are insolvent.

But the auditors have a legal liability to the banks. If evidence of missappriopriations are found, and the auditing firms found guilty of being complicit, the CBN has the power to at least initiate proceedings against them and invite them for clarification. You cannot sieze or liquidate a company without the involvement the companies auditors/ accountants. Go and find out !

Again the companies have not been seized or liquidated. The CBN has fired the old board that are guilty of sharp practices, and replaced them with an interim management. Change of ownership of the bank becomes an issue if the shareholders are seen to have been complicit with the sacked executives, which is relevantr when said executives control a major stake in the company, directly or through a proxy.

The complicity of the auditors would be determined as the investigation continues, but that is independent to CBNs function in supervising the sector.

Lets stop praising vanguarg tehy are owned by these fats cats,
was actually thinking Thisday will be doing the mudslinging but
surprise surprise Vanguard took it head on, throwing tribalism into it
all the stories till dat has no single technical, legal analysis just
informed sources inside here and there
knowing how naija is the same people that informed vanguard are those
that will inform the bank chief to run when they were called for a meeting with the CBN

What I'd like to know from the economist and bankers are

Why are the banks or some of the bank so much against uniform year end report

The previous CBN Governor appointed auditors to banks in nigeria, what happened to their work?

What i find difficult is, if the CBN found out that these 5 banks were ditressed, why then did it run an audit for the 10  banks and not the five or all 24 banks? My answer simply is that sanusi  just needed to add 5 other banks to make it look like an audit when in the real sense conclusions were made on his preconceptions even before he became CBN governor. Secondly he did not make it an audit of 24 banks because it will be easy for people to do per comparison and see where he has faltered.

I hear some say since Sanusi was an insider as MD of FBN he probably knew where the problem is and he attacked immediately. If that is the case he should have told us that he used his general understanding of the system  instead of feigning a proper audit.

One of the pro-sanusi post even argue that in the case of oceanic , the report signed by CBN was as at DEC 2008 and the CBN special audit was for MAY 2009. So if the CBN claims that the problems in these banks has been for eleven months and it signed a report on  14th JULY 2009( well into the audit exercise) and sacked the MDs in august, and people still see nothing wrong , then we have a problem.

The CBN has had its staff resident permanently in all banks since the beginning of the year, and at the end of every finacial year, audits the books of banks specially  before signing the report.  So what is sanusi saying?

The CBN has doctored the list of bad loans for these banks to evade questions becuase like in Union bank a lot of government agencies are culpable. No one is asking questions.

The issues have now graduated from liquidity ,bad loans, to share price manipulation, other forms of abuse etc and now CBN planned sale of the banks.

Although the degree varies but I can tell you  that there is hardly any  bank in this country whose management will not be found wanting for this same vices if a fair audit is conducted. Yes I mean even the FBNs of this world. This is due largely to the poor regulatory framework of agencies like CBN,SEC,NDIC.  So do an audit of all the banks and show us the entire result including the bad loans in the banks that "passed".

As for intercontinental bank , we all know that there may have been bad management decisions like minimum deposit,hidden charges etc. However it is wrong to judge that solely  as a sign of distress . reports from intercontinental bank suggest that FBN of which sanusi was MD was largely responsible for the run on the bank early this year with the demarketing stuff.  

Now why is the CBN in such a hurry to sell these banks. abeg make we open our eyes.

Dis Guy:

What I'd like to know from the economist and bankers are

Why are the banks or some of the bank so much against uniform year end report

May be the same reason why CBN is against uniform audit. They know there will be deadlock , because if they publish all otedola's/dangote etc bad loans in all banks they will not be able to collect from "peter" to pay "paul" again.

People will know the whole truth and the emptiness of the economy will come to the fore.

na_so:

What i find difficult is, if the CBN found out that these 5 banks were ditressed, why then did it run an audit for the 10  banks and not the five or all 24 banks? My answer simply is that sanusi  just needed to add 5 other banks to make it look like an audit when in the real sense conclusions were made on his preconceptions even before he became CBN governor. Secondly he did not make it an audit of 24 banks because it will be easy for people to do per comparison and see where he has faltered.

The 5 banks already showed signs of being insolvent based on the activities in the interbank market. Based on initial findings, the audit was expanded to all 24 banks to determine the true state of the banks. Already another batch of 11 banks are being audited.

I hear some say since Sanusi was an insider as MD of FBN he probably knew where the problem is and he attacked immediately. If that is the case he should have told us that he used his general understanding of the system  instead of feigning a proper audit.

Being an executive in the banking sector would make you privy to enough info to know who the likely culprits would be. Yet the 5 were selected for initial audit based on their EDW activities, and not his general understanding of the system. Though, his understanding of the system was one of the reasons that it is desirable to have someone like him as CBN governor, but it would be erroneous for him to act strictly on that.

One of the pro-sanusi post even argue that in the case of oceanic , the report signed by CBN was as at DEC 2008 and the CBN special audit was for MAY 2009. So if the CBN claims that the problems in these banks has been for eleven months and it signed a report on  14th JULY 2009( well into the audit exercise) and sacked the MDs in august, and people still see nothing wrong , then we have a problem.

It would have been wrong for the CBN to reject the filings prior to the audit being concluded.

The CBN has had its staff resident permanently in all banks since the beginning of the year, and at the end of every finacial year, audits the books of banks specially  before signing the report.  So what is sanusi saying?

Of course some CBN staff are also complicit in the act, and I expect them to be dealt with in due time. Already there are rumors that the CBN will be overhauled, starting with the board.

The CBN has doctored the list of bad loans for these banks to evade questions becuase like in Union bank a lot of government agencies are culpable. No one is asking questions.

Do you have any proof of said doctoring? or a credible list to compare against the CBN publication?

The issues have now graduated from liquidity ,bad loans, to share price manipulation, other forms of abuse etc and now CBN planned sale of the banks.

should they have ignored all the other findings? If new ownership of the bank would fix the problem, I dont see what the issue is.

Although the degree varies but I can tell you  that there is hardly any  bank in this country whose management will not be found wanting for this same vices if a fair audit is conducted. Yes I mean even the FBNs of this world. This is due largely to the poor regulatory framework of agencies like CBN,SEC,NDIC.  So do an audit of all the banks and show us the entire result including the bad loans in the banks that "passed".

The CBN has said there will be a comprehensive report at the end of the exercise. But that should not be an excuse to allow the confirmed bad management to fester.

As for intercontinental bank , we all know that there may have been bad management decisions like minimum deposit,hidden charges etc. However it is wrong to judge that solely  as a sign of distress . reports from intercontinental bank suggest that FBN of which sanusi was MD was largely responsible for the run on the bank early this year with the demarketing stuff.  

So First Bank was cooking the books of Intercontinental and making sure that Intercontinental did not declare bad debts accordingly? when FBN itself is known to often write off bad debts on its books.
If Intercontinental have genuine grievances that are being brushed aside by the CBN, they should make the evidence available for all to see.

Now why is the CBN in such a hurry to sell these banks. abeg make we open our eyes.

So we should leave the banks in the hands of those that have been doctoring the books?

Binna's strategy is to respond to everything whether he has a credible answer or not

I believe his thinking is any answer will do.

But the fact is that any criminal takeover of these banks by Sanusi will be resisted.