What a wonder!! What is Nigeria into with this Sanusi guy! 100 billion Naira spent to print 420 billion Naira. This is crazy! What is General Sanusi up to! Looks like Nigeria is in for some real drama! Enjoy the article! CBN spent N100bn to print N420bn for troubled banks - We ’ll print more naira to save other banks - CBN - Reps set for showdown with CBN gov
From Odidison Omankhanlen, Gbola Subair, Friday Ekeoba and Idowu Samuel - 02.09.2009
THERE are strong indications that the Central Bank of Nigeria (CBN) expended over N100 billion to print the N420 billion bailout funds for the five troubled banks in the country.
The cost of printing the currency was borne by the apex bank at the normal rate currencies are printed, which is usually three times less the value of the current value of the naira.
However, the CBN has said that it will print more naira to bail out more banks as it concludes auditing of 11 other banks in the ongoing audit process.
The currency notes, which were printed abroad, was done without the approval of the National Assembly, a development which the legislature had kicked against as usurpation of its power by the CBN. All efforts to get the response of the apex bank proved abortive.
It will be recalled that the CBN governor, Mr. Lamido Sanusi, while responding to a question at a Town Hall meeting with stakeholders in London recently on how the CBN sourced the N420 billion it recently injected into five banks in the country, said: “We printed money. We created an asset on the balance sheet basically to pump money into the system because money supply was negative in the first half of the year. We did not borrow money.”
The CBN had on August 14 sacked the chief executives and executive directors of five banks; Oceanic Bank International, Intercontinental Bank, Afribank Nigeria, Union Bank of Nigeria and FinBank, over issues bordering on breach of corporate governance and insider-related abuses.
He noted that the failed banks had N747 billion non-performing loans and other exposures totaling N2.3 trillion in their books. The CBN injected N420 billion as life support into the banks. Union Bank of Nigeria received N120 billion as the largest beneficiary; Oceanic Bank, N100 billion; Intercontinental Bank, N100 billion; Afribank Nigeria, N50 billion; and FinBank, N50 billion.
Subsequently, the CBN published the names of individuals and corporate debtors of the banks and through the efforts of the EFCC, huge recoveries had been made.
Meanwhile, the House of Representatives is bracing up for a showdown with Central Bank of Nigeria (CBN) governor, Mr. Sanusi Lamido Sanusi, over his injection of N400 billion into five distressed banks without seeking the authorisation of the National Assembly.
The House is even irked by the insistence of the CBN governor that the apex bank in Nigeria did not require any form of clearance from the National Assembly to offer such a loan to the affected banks to save them from collapse.
Indications that the House would not take the issue casually with the CBN emerged on Tuesday following series of meetings by the principal officials on the steps to take to call the Central Bank governor to order.
The House, which is currently on end of the year recess, is expected to issue a strong statement on the action by Sanusi, which members were said to have viewed as a violation of the constitution.
Nigerian Tribune learnt that the manner the CBN had been addressing the issue of the five troubled banks, most especially the role being played by the Economic and Financial Crimes Commission (EFCC) in clamping the former bank executives into detention, at the alleged prompting of the CBN, will be the major issue to be discussed by the Representatives on their resumption at the end of the month.
The Principal House officials during their meetings were said to have considered the necessity of calling the CBN governor to order by way of summoning him to explain reasons behind his actions.
The House Committee Chairman on Land Transport, Honourable Benard Udoh, who confirmed the position of the House Leadership on the crisis in the banking sector in a chat with the Nigerian Tribune, said members would not spare Sanusi on the actions he had taken so far.
Meanwhile, Sanusi and his management team are to appear before the Senate Committee on Banking today to answer charges of improper appropriation of money to the five troubled banks.
Sanusi himself disclosed this on Tuesday in Abuja at a press briefing held after the 210 edition of the Monetary Policy Committee (MPC) meeting. According to Sanusi, the N420 billion given to the five troubled banks was not a bailout but financial intervention to bring back those banks into a position where they would be able to meet their contractual obligations to their customers, stating that the ongoing debt recovery efforts in these banks was to ensure that the depositors and the banking industry were not endangered.
Disclosing that the apex bank had concluded the audit process of 11 other banks, the CBN governor said at the end of the day if any of these banks were found to be defective, the CBN would print naira to bail them out.
“We are going to create money, we will increase money supply to provide financial intervention to bail out any of the banks in the recently concluded auditing for the next batch of eleven banks,” the governor said.
On the furore generated by the CBN bailout of the five banks, the CBN governor said the apex bank did not need any appropriation to bail out the banks, stressing that what the CBN did was to lend money to the affected institutions.
Link: [url] http://www.tribune.com.ng/02092009/news/news3.html[/url] |
