5 banks use only N100bn of CBN’s N420bn
Headlines Sep 10, 2009 By Omoh Gabriel, Business Editor
LAGOS — FOUR weeks after the Central Bank (CBN) sacked the chief executives and executive directors of five banks and injected N420 billion into the banks, Vanguard can authoritatively disclose that the banks needed just N100 billion financial assistance to stabilise their operations and not the whooping N420 billion injected by the apex bank.


Already, some bankers are saying the CBN blew the situation out of proportion to achieve a desired end.
Bank treasurers yesterday told Vanguard that “the five troubled banks did not, after all, need the size and volume of bail out injected by the Central Bank of Nigeria, CBN, allegedly to stabilise their operations.”


All the banks, according to them, have stabilised in both the interbank market and clearing house.
According to treasurers who volunteered information “Out of the N400 billion injected by the CBN into the five banks, the banks have used barely N100 billion on the whole.”

Of the five banks, Oceanic is said to have utilised the highest after using N50 billion out of the N100 billion the CBN injected into it.

Intercontinental Bank, Vanguard learnt, used N32 billion out of the N100 billion injected into it.
Similarly Union Bank is said to have utilised just N16 billion out of the N120 billion injected. Afribank and Finbank had N50 billion each and have not utilized up to 5 per cent of the fund injected.

Bank treasurers point to the fact that even the portions so utilised were precipitated by the undue pressure on the banks following the CBN action of August 14.

“The funds so far used out of the amount injected by the CBN represents about 25 per cent of the total bail-out fund and the amount has so far actually stabilised the banks,” a banker said.

Bankers also say that what the bailed out banks are currently doing is using the fund to play in the interbank market where banks lend to one another.

According to them, the N100 billion the banks have used is also the same amount the CBN used to print the N420 billion bail-out fund. Banking insiders are of the view that the true situation of the banks was blown out of proportion by the CBN to prepare the ground for the take-over of the affected banks.

It will be recalled that on August 14, the CBN Governor at a world press conference in Lagos said the CBN was “injecting N400 billion as tier two capital into the five banks to salvage their financial condition”.

According to him, “the huge provisioning requirements have led to significant capital impairment. Consequently, all the banks are undercapitalised for their current levels of operations and are required to increase their provisions for loan losses, which impacted negatively on their capital.

Indeed one is technically insolvent with a Capital Adequacy Ratio of 1.01 per cent. Thus, a minimum capital injection of N204.94 billion will be required in the 5 banks to meet the minimum capital adequacy ratio of 10 percent” but he injected N400 billion.

“The five banks were either perennial net-takers of funds in the inter-bank market or enjoyed liquidity support from the CBN for long periods of time, a clear evidence of liquidity.

In other words, these banks were unable to meet their maturing obligations as they fall due without resorting to the CBN or the inter-bank market. As a matter of fact, the outstanding balance on the EDW of the five banks amounted to N127.85 billion by end July 2009, representing 89.81 per cent of the total industry exposure to the CBN on its discount window while their net guaranteed inter-bank takings stood at N253.30 billion as at August 02, 2009.

Their Liquidity Ratios ranged from 17.65 per cent to 24 per cent as at May 31, 2009. (Regulatory minimum is 25%).”





http://www.vanguardngr.com/2009/09/10/5-banks-use-only-n100bn-of-cbns-n420bn/







i sense alot of hidden agenda in this, let just watch this movie and watch out of part 3

Na wa. If this is true, the banks were not at all insolvent. Lets wait and see sha.

hmmm . SLMA

As far as I am concerned the whole controversy going on with the CBN is all made-up

It is what you get when new officials choose politics over progress

Sanusi has spent more time in office playing politics than crafting an economic policy that works.

He is also at risk of spending more of his time going forward playing politics than running the CBN.

I just hope he does not run down the whole economy.

Vanguard newspaper is a discredited source. Find another source abeg.

@ Beaf, Mikeansy and other reactionary elements, I await your comment on the thread below:

https://www.nairaland.com/nigeria/topic-321696.0.html

But why should Dayo-Coker be taken anymore seriously than the news organisation Vanguard?

Do we now have a case where we consider any organisations whose views we dont agree with as "discredited source"

Dayo was the first to break the news of Intercontinental bank's liquidity problems back when the bastards were feeding lies to the press. . . . he also details the way in which Vanguard has been compromised, from hosting phony awards where they charge N8m a seat to writing articles to pre-empt Sanusis actions such as the now-famous article. . . not to mention Vanguard insulting our intelligence by claiming it cost N100bn to print N400bn when we all know the money was created by fiat. . . . come on guys, dont be a puppet on another mans string. . . . given a choice, I would stick with Dayo Cokers analysis rather than the nonsense coming out of Vanguard.

OYB_MEND:

But why should Dayo-Coker be taken anymore seriously than the news organisation Vanguard?

Do we now have a case where we consider any organisations whose views we dont agree with as "discredited source"

my brother ask them oh

Ibime:

Dayo was the first to break the news of Intercontinental bank's liquidity problems back when the bastards were feeding lies to the press. . . . he also details the way in which Vanguard has been compromised, from hosting phony awards where they charge N8m a seat to writing articles to pre-empt Sanusis actions such as the now-famous article. . . not to mention Vanguard insulting our intelligence by claiming it cost N100bn to print N400bn when we all know the money was created by fiat. . . . come on guys, dont be a puppet on another mans string. . . . given a choice, I would stick with Dayo Cokers analysis rather than the nonsense coming out of Vanguard.

We have a choice to believe what we like

But to suggest that someone has the high ground to pontificate on everyone elses write-ups is just funny
Why can't we think that Dayo-Coker is compromised? in fact how do we know Dayo Coker was not privy to the plan to create a made-up banking crisis and was only executing his/her job as the igniter of this whole circus.

mikeansy:

But to suggest that someone has the high ground to pontificate on everyone elses write-ups is just funny
Why can't we think that Dayo-Coker is compromised? in fact how do we know Dayo Coker was not privy to the plan to create a made-up banking crisis and was only executing his/her job as the igniter of this whole circus.

hehehehe. . . . let Dayo Coker come and defend himself here. . .

Until then, it is a proven fact that Vanguard's intentions are not pure. . . . that much is shown incontovertibly by the poppycocks they fed us about the N420bn costing N100bn to print. . .

the fact also remains that Vanguard's prediction in March, 3 months before Sanusi took office has co-incided with all of Sanusi's clandestine actions.

mikeansy:

the fact also remains that Vanguard's prediction in March, 3 months before Sanusi took office has co-incided with all of Sanusi's clandestine actions.

Do you think those banks were not in trouble by March already?

To quote Dayo Coker:


"Unbelievable!!! In what must be a contender for this year's most stupid argument,Vanguard has backed its campaign against Sanusi with an article it published in March detailing a supposed plan by “anti-consolidation” forces to take over five Nigerian banks. I don’t understand why the Nigerian public is taking this rag sheet seriously when Sam Amuka-Pemu’s “tissue paper” newspaper does not even qualify to be called a tabloid.

Let’s look at the timeline. Vanguard published the article on March 23, 2009. At the time the article was published, those five banks were already heavily indebted to their peers at the inter-bank market and there were already concerns over their financial health. In fact, Dayo Coker was already on the trail of Erastus Akingbola and had released his findings to the press.

Their chief executives must have suspected that Sanusi would be a tough cookie and quickly dispatched their PR strategists under the aegis of ACAMB to plant the story. Of course, Vanguard’s moronic journalists played along and concocted this baseless story to distract the new governor. The article was meant to preempt Sanusi and force him into making a compromise but he refused to buckle under pressure. The Nigerian public does not understand that Vanguard newspaper is one of the biggest beneficiaries of the corporate malfeasance that pervaded the Nigerian banking sector. For years, the “newspaper” made a killing from the Vanguard Bankers Awards where a table for eight went for a whopping five million naira."

The official records by march did not say the banks were in trouble

even as we speak, there is no clear evidence that the banks are insolvent.

that a company has made a few losses does not mean it is insolvent.

The current CBN Governor also has the capacity to alter his statistics to reflect that the banks are going under even though they are not, just like his predecessor had the capacity to cover these banks and claim they were not actually going under when they were

I do not have any reason to trust the figures coming out of the CBN these days anymore than I could trust the figures coming out of CBN in March.

So this is what I know, nobody knows who is telling the truth.
But I also know that the haste with which the current CBN Governor has tried to execute certain activities is very dodgy and that is what I believe.

I have no time speculating on people's intentions, I don't know what Sanusi's agenda is . . . . but whatever his agenda, his actions are not in the strategic interest of the Nigerian economy. He has done more harm than good since coming to office.

mikeansy:

The official records by march did not say the banks were in trouble

What a laugh. . . . what official figures?. . . . the fake reports printed by the bank which were mostly unsigned by the auditors?

Dont twist yourself out of all human form defending the fact that these banks are not in crisis. They evidently are and have been for some time, hence the EDW and now the bailout.

Thank God for the regularisation of the financial year. I hope we never have to put up with cooked books again.

Banks were so healthy, they had to take out newspaper adverts begging Yar'Adua to come and help them recover their non-performing loans. . . . guess what?. . . . Yara has done just that!. . . . but at the same time, the corrupt, incompetent CEO's have to pay for their malperformance.

I also think the current reports by the CBN are false!!!

To achieve an alterior motive

Tell me why we should believe one side and not the other.

At the end of the day it all boils down to a crisis of confidence with all the figures coming out from the financial sector
Standardizations and better assured reporting could have been achieved by putting frameworks in place with less noise.
The Nigerian Financial sector will not be repaired from this damage in the next 5years, and all of these is a directive result of Sanusi's actions which at best is a blind militant approach to problem solving or at worst is a clandesting agenda which puts politics over progress.

But Vanguard just three days ago reported the inter bank market has crashed, that there is no activity happening there. how can they come back in 3 day time and say the banks are putting the money in inter--bank market.

[b]There has been a lull in inter-bank money market activities as banks have shunned themselves due to uncertainty over the outcome of the on-going fresh audit of the banks ordered by Central Bank of Nigeria, CBN.
Investigations by Vanguard showed that though, there is sufficient liquidity in the market, it is not spread evenly among the banks.

A money market source said that some of the banks with surplus liquidity were reluctant to lend to other banks due to fear of losing their money in case the outcome of the CBN audit was negative.

“People are selecting who to deal with these days because they don’t want to lose money,” the source said.

Investigation also revealed that this cautious attitude prompted one of the two biggest banks, said to be the biggest net placers of fund in the market to withhold its funds from inter-bank lending. It was gathered that the bank deposited N43 billion with the CBN through the Standing Deposit Facility (SDF).

Although average inter-bank rate is put at 4.25 per cent, the bank, it was gathered, chose to deposit the money with the apex bank at 4.0 per cent.

The uncertainty in the market notwithstanding, money market operators said cost of funds was expected to remain stable this week.[/b]

http://www.vanguardngr.com/2009/09/08/inter-bank-lending-drops-as-naira-crashes-further/

If the 5 banks are not using the money like Vanguard claims and putting it in the inter-bank market, so why did they reporting just three day ago that this same banks are going to the inter-bank market to borrow money but other banks are shunning them?

When would vanguard newspaper stop this their daft and ill informed campaign of calumny

naijatoday:

But Vanguard just three days ago reported the inter bank market has crashed, that there is no activity happening there. how can they come back in 3 day time and say the banks are putting the money in inter--bank market.

Yeah. . . . there would be some truth in that. . . . banks will not lend to each other until all the CBN audits are completed cos they dont know each others financial situation.

i am very convinced that there is more to it wit these bank shake up, in as much as i try to believe sanusi action were without hidden agenda, i find it difficult to convince my self with his manner of approach, as everything seem to be the way vanguard as predicted,
if we say vanguard is not a credible source, why not the cbn douse the tension, by releasing, the result of the audits, of this banks, to the member of the public, if truly, special examinations were conducted,
the cbn should as a matter of urgently, also release the result of the remaining 14 banks audited which we heard that is out already,
this would allow us knwo the true position of the banks, and Nigerians can read the result of this special audit and we can judge and say if this banks were insolvent or not,

i support the banking reform with all my heart, but totally against any hidden agenda, why the noise about nigeria, in US, bank folded up, so what is the big deal, why dont we learn to do things the right way, other than just causing public panic and allowing rumours to fly all over,


just wactch out for part two, i will post more as soon as i gave them

dayo1401:

i am very convinced that there is more to it wit these bank shake up, in as much as i try to believe sanusi action were without hidden agenda, i find it difficult to convince my self with his manner of approach, as everything seem to be the way vanguard as predicted,
if we say vanguard is not a credible source, why not the cbn douse the tension, by releasing, the result of the audits, of this banks, to the member of the public, if truly, special examinations were conducted,
the cbn should as a matter of urgently, also release the result of the remaining 14 banks audited which we heard that is out already,
this would allow us knwo the true position of the banks, and Nigerians can read the result of this special audit and we can judge and say if this banks were insolvent or not,

i support the banking reform with all my heart, but totally against any hidden agenda, why the noise about nigeria, in US, bank folded up, so what is the big deal, why dont we learn to do things the right way, other than just causing public panic and allowing rumours to fly all over,


just wactch out for part two, i will post more as soon as i gave them

It is called confidentiality, there are some information that should be between the CBN and the banks. If those banks want to release the information to the public then so be it. Sanusi only released some information that he could to justify and explain his decision . If the case goes to court, then the confidential agreement issue is thrown out the window.

In the United states an audit (stress test) of the top banks was just completed, the federal reserve did not release detailed information to the public, only to the banks. The only information it gave to the public was which bank needed to inject fresh capital to increase their reserve.

dayo1401:

if we say vanguard is not a credible source, why not the cbn douse the tension, by releasing, the result of the audits, of this banks, to the member of the public, if truly, special examinations were conducted,
the cbn should as a matter of urgently, also release the result of the remaining 14 banks audited which we heard that is out already,
this would allow us knwo the true position of the banks, and Nigerians can read the result of this special audit and we can judge and say if this banks were insolvent or not,

Come on now, did the American Federal Reserve release the results of their stress test when they wanted to recapitalise their banks? FFS, they didnt even release the names of the 19 banks they conducted the tests on.

naijatoday:

It is called confidentiality, there are some information that should be between the CBN and the banks. If those banks want to release the information to the public then so be it. Sanusi only released some information that he could to justify and explain his decision . If the case goes to court, then the confidential agreement issue is thrown out the window.

In the United states an audit (stress test) of the top banks was just completed, the federal reserve did not release detailed information to the public, only to the banks. The only information it gave to the public was which bank needed to inject fresh capital to increase their reserve.

Really?

I thought we were in the era of 100% disclosure and transparency.

Or we only do transparency when we want to take over 5 banks through the back door

mikeansy:

Really?

I thought we were in the era of 100% disclosure and transparency.

Or we only do transparency when we want to take over 5 banks through the back door

Even in the era of disclosure, there are some information you do not release to the public, especially in the case of banks which are systematically important to the economy of a country. It happens around the world, it is not only Nigeria.

naijatoday:

Even in the era of disclosure, there are some information you do not release to the public, especially in the case of banks which are systematically important to the economy of a country. It happens around the world, it is not only Nigeria.

So what has the noise been all about

I thought we now have a messianic Risk manager who will now table the bank books and all reports on the internet and other forms of media for all to see.

The truth is now coming out little by little.

This is why I think the Banking crisis is made-up, when all the dusts are settled we will realise that not a lot would have changed and the media circus was not necessary in the first place.

mikeansy:

So what has the noise been all about

I thought we now have a messianic Risk manager who will now table the bank books and all reports on the internet and other forms of media for all to see.

The truth is now coming out little by little.

This is why I think the Banking crisis is made-up, when all the dusts are settled we will realise that not a lot would have changed and the media circus was not necessary in the first place.

What noise?

From Day 1, he said he will not discuss the detail of any bank in particular. He said the audit will be given to each banks and if the want to discuss it with the public, that is their choice.

We can sit here an argue all they about the crisis was made up or not.

Nobody still has not answered the very simply question of how this banks were able to declare jumbo profit from September 2008. When they confirmed they were exposed to the capital market which has crashed and oil market when the oil price dropped. They cannot say the money came from foreign banks, becasue a lot of the foreign banks stopped or reduced lending and kept the money to themselves to pad their own accounts and Direct Foreign investment in the whole of Africa fell, Africa witnessed the second highest withdrawal of foreign investment after the economic meltdown.

when there are videos of Sanusi on NBC saying the banks need to be made to disclose more of what they have in their books

it makes nonsense of all he has been doing and all he has been saying if he can not disclose his audit, its hypocritical.

This is the digital age folks, whatever you say are on records. People will not forget what you said previously because the CBN are now asking abdulahi Mohhamed to send out statements.

Its all on record.

mikeansy:

when there are videos of Sanusi on NBC saying the banks need to be made to disclose more of what they have in their books

it makes nonsense of all he has been doing and all he has been saying if he can not disclose his audit, its hypocritical.

This is the digital age folks, whatever you say are on records. People will not forget what you said previously because the CBN are now asking abdulahi Mohhamed to send out statements.

Its all on record.

There is a difference in disclosing what is in your books and giving confidential information.

When he is talking disclosure he talking about reporting using the IFRS accounting standards. Nigerian banks are using local outdated accounting standard.

As I said even in the U.S were they use international standard, the federal still refused to disclose the audit to the public. It is different from the CBN to tell it shareholders to disclose how much non-performing loan they have in their books, their exposure to different sectors, the performance of their subsidiaries, companies they own shares in, etc. This is totally different from the detailed audit you want the CBN to release.

what is confidential information

the audit was about what was in bank books

Nigerians like using big words thinking others will be scared

Sanusi claims to want to institutionalize transparency when he is not willing to be transparent himself
This is how he accused banks of cooking their books and then went ahead to cook debtors list

enough of the noise abeg!!!!!

@mikeansy
Simple question: were the 5 banks in distress before the intervention of the CBN?

biina:

@mikeansy
Simple question: were the 5 banks in distress before the intervention of the CBN?

Nobody knows the answer to that question because right now I have no reason to believe that some of the figures coming out of the CBN were not made up.

Most Nigerians have lost confidence in the CBN as an independent regulator.

Time will tell who is telling the truth.
But i think Soludo did well

mikeansy:

Nobody knows the answer to that question because right now I have no reason to believe that some of the figures coming out of the CBN were not made up.

Most Nigerians have lost confidence in the CBN as an independent regulator.

You 'have no reason to believe that some of the figures coming out of the CBN[b] were not made up[/b]'.?
Do you have cogent reasons to believe that the CBN figures are made up?
Do you have a credible source (e.g. the banks themselves) that says the figures are false and provided counter evidence?

When I say figures, I am not referring to a list of debtors, but rather indices like:
1. Percentage of non performing loans
2. Percentage of margin loans and exposure to Oil & Gas
3. Capital Adequacy Ratios (CARs) and Liquidity Ratios (LRs)
3. EDW debts of the banks etc
that the CBN gave as basis for the action they took.

No one is saying the banks might not have had troubles. I don't care about the Vanguard and care even less for Dayo Coker (an obvious insider). The issue is Sanusi and his agenda (or highly improbable lack off).

Sanusi's agbero methods just cannot convince any rational mind, they only raise goose bumps and intense suspicion. There are too many unanswered questions.

Heading the CBN is a delicate and sophisticated task suited to the most professional and calmest of heads.
Sanusi's methods have been nothing but an exercise in crudity that has only harmed our economy an further stressed an already tense polity.

There were countless errors in both names, designations and figures when the CBN released its list of criminals debtors. There can be nothing more embarrassing and unprofessional than an apex banking institution getting designations and figures wrong. Disgraceful.
It speaks of shabby leadership; worse, it hints at darker and underhand tactics, like there is an agenda to work backwards and fit a situation on the banks.

As to the extent of the banks troubles (if there were any); it is impossible to believe a Central banks that gets figures on debtors so wrong that it has invoked a cloud of potential lawsuits. Thing got to such an extreme that the Nigerian Bar and legal practitioners in their individual capacities felt uneasy enough to directly warn the CBN to keep within the law. The CBN is not the jungle.

So much noise and fanfair was made over issues that would have been better dealt with by an application of wisdom. The question is why?

I expect an unravelling.