About seven of the nine banks affected by the audit exercise recently concluded by the Central Bank of Nigeria (CBN) may have lost a whooping N500 billion in deposit money between August 14 and this week. The banks are Oceanic, Afribank, Union, Finbank, Intercontinental, Bank PHB, Spring Bank and Equitorial Trust Bank ]ETB)
Sources at the banks told Saturday Sun that the run on deposit, which occurred in three stages following CBN’s August 14 pronouncement, started with retail customers, who withdrew over N200 billion from the first five banks, whose chief executives were removed by the CBN. It was learnt that the initial withdrawal of deposits was borne out of panic.

The situation, sources in the banks said, worsened following the gap between August 14 and last week when the CBN announced the second stage of its action, with various speculations in the air.
Saturday Sun gathered that, over N100 billion was also lost thereafter. This, it was gathered, came from corporate customers, which pointed at the confidence gap created by the CBN follow-up action as their main source of anxiety. They said that CBN statements, meant to rebuild confidence in the banking public, were full of errors and contradictions, a development, which ensured that withdrawals continued steadily.
According to investigations, the uncertainty generated a quiet run, which lasted throughout the duration of the second audit exercise of the 14 banks, which snowballed into the last stage. It was gathered that this affected a lot more banks and accounted for the recently lost N200 billion, with Bank PHB and Spring Bank taking massive hits.

It was gathered that banks generally have been posting operating losses since August, as lending activities have virtually come to a halt. As a result of this, banks have been secretly reducing work force.
Sources revealed that Stanbic/IBTC recently laid off 300 staff, representing more than 10 percent of its staff strength. First Bank had sacked 500; Wema, 300; Union, 1, 000; and Afribank 500 and still planning to ease out another 300.

Meanwhile, it was gathered that the country may have only 15 banks by the time Mallam Sanusi Lamido concludes his consolidation programme in the banking sector. Sources said that the CBN has advised some banks to raise money and buy up the nine banks said to have liquidity problem, in line with the plan.
Towards the end, it was gathered some northern businessmen are positioning themselves to acquire Bank PHB and ETB, so that the North would have control of some banks. Sources said that the interest in Bank PHB is predicated on the fact that Habib Bank was part of it initially before the North lost out to the South under the consolidation during the Chukwuma Soludo era at the CBN.

Sources said that the bank audit and rationalisation may have a link with the 2010 election. It was gathered that with the shockwaves in the banking sector it would be difficult for some people to finance electioneering in 2010.

Saturday Sun reported last week that chieftains of the Peoples Democratic Party (PDP) are worried that most of the bank debtors are people who had donated money to the party to execute political programmes. With such people battling to pay banks, they would not be in a position to render such assistance in future.
In such situation, only those who are controlling the banks, in that case the North, would be in a position to raise funds that could be used to execute political campaigns.

Let us see what will be next.

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