Sanusi incompetent to manage [/b]CBN
If I were his employer I won’t retain him’
By Vivian Onyebukwa
Saturday, December 5, 2009 
Timtiniko Enodien
Photo:The SUN Publishing
More Stories on This Section

His Royal Majesty Timtiniko Enodien is the monarch of Eket, Akwa Ibom State. The monarch feels so bad about what goes on in the banking sector, especially the way the Central Bank of Nigeria (CBN) battles commercial banks and still threatens to do more.

Enodien is not just the ordinary observer of the development. [b]He is a knowledgeable citizen in banking with a PhD in Public Finance, two previous degrees in Economics from universities of reputation in Europe and USA. He worked and retired as Permanent Secretary in the presidency and Federal Ministry of Finance. During his working years, he represented government interests as director in several banks. Therefore, he is at home with banking and its policies.

He feels livid with the way the CBN Governor, Sanusi Lamido Sanusi manages the nation’s economy and is sure if the man is allowed to continue his way, the nation is economically doomed.

The old economist does not think Sanusi should be watched helplessly. It is either the president and finance ministry call him to order or he ruins the banking sector and ultimately the economy as he told Saturday Sun in his palace at Eket.

The question of how best the CBN can manage or correct itself on its present policies on commercial banks is a large one. But it could be broken down with time as our discussion progresses. The bottomline is that the CBN through its activities has been killing the banks and that is not proper. I begin to wonder whether the management of the apex bank actually knows what they are doing. Because the first thing to learn about banking is that bank is the most sensitive establishment or business outfit in the sense that you only need a rumour – real or imaginary to kill the bank totally. It is as easy as that and a good management of the apex bank will go by the rules. And the rule is that a bank is considered insolvent or inadequate if it doesn’t meet the depositors’ liability. Customers come to the bank and drop their money on trust that whenever they need it no stories would be told about it.

Therefore, if there is any problem in the banking sector, the CBN should rather manage it wisely instead of making a public show of it, otherwise you are invariably killing what you should protect. Listing a number of banks and declaring them insolvent before the public is in fact killing them before their real death. Assuming something was wrong, there are ways to handle it. There is what is called liquidity ratio in banking – the ration of cash and other easily realizable assets are mostly held by the CBN. Whenever there is imbalance in this or when it is not favourable, it is the duty of the CBN to find ways of correcting the anomaly and putting the bank back on track.

That intervention is intended to prevent the affected bank from going under. For instance, we heard of rescue measures by government in several economies during the meltdown. But meltdown is just somebody’s invention or coinage. It simply means a recession – a situation where there is less and reduced economic activity. Consequently, there is not enough money to buy goods and services and a backlash of further dull and slower economic activity as people lose their jobs. It leads to job loss, which swells the unemployment ratio that possesses the spending power that keeps the economy going.

That is why I wonder whenever I read that the CBN governor boasts that there are still more banks to go under his hammer whether he understands the implications of his actions. No good central bank does that or speaks that way as if to scare people, even foreign investors, or cause stampede in the economy. If things get so bad, the CBN investigates, looks at the liquidity ratio and looks at the books and calls the involved banks to order.

Banks survive on confidence. For instance, there is the N100 note. The value is nothing as a piece of paper. The real value is that confidence by the owner of a commodity who you give it in exchange for his goods who collects it because he knows the plantain seller, for instance, will not reject it in exchange for plantain. Any time he understands that the confidence of the seller of what he wants over the N100 he has is destroyed by any economic force or reason or policy of state, the N100 possesses no value at all. It actually turns to a piece of worthless paper. That is exactly the same with banks. When the confidence is destroyed, then nothing is left for the economy to survive on and that is exactly what the present CBN Governor, Sanusi Lamido Sanusi is doing.

So, I keep wondering where we are going in a nation that talks about Vision 20: 20-20. I can assure you that with the CBN style of killing the banks it will not be real. In fact we have to heal the banks CBN governor killed before we talk of recovery, which will take so long. I say it many times over that the sector has been killed because the confidence has been thoroughly shaken. I still wonder and ask other Nigerians whether this CBN governor is solving the problem of the banks or helping in killing them.
I didn’t know of any such haste or policy change in the CBN management before Sanusi came in.

For instance, we heard of investigation of the banks before or after the announcement of sack of bank managing directors, yet certain things as we hear make us question that investigation and its outcome. But I know that the rule is after a team is sent out for investigation, you sit down with it and see the findings before taking action. Now the developments in the CBN try to show us there must have been procedures not properly followed or hastily executed.

Even when you find out from a proper investigation that something went wrong or that your investigations are accurate, you have no need blowing the outcome open to the public. You first of all sit down with the directors of the bank/s and reason with them on the best way to tackle the problem. If for instance the liquidity is poor and needs to be shored up or there are other problems, the CBN agrees with the directors on how to correct the anomaly. It will be the duty of the apex bank to give the affected bank limited time to comply and since they know the consequences of non-compliance, there are under obligation to do just that and find way of healing the bank. But if at last there is no common ground on finding solution to this problem, nothing in the books say the CBN should take over the banks or sit down somewhere and announce the sack or removal of the director or head of the banks. All these measures are set in place not to encourage unethical practices in the sector, but to guard against steps that could cause chaos and engender more damage to the economy by blowing it open that Bank A, K, or P is down and out.

Okay, there is the bank board of directors, and I ask in these drama we have witnessed, were they properly and adequately involvement before the action was taken. The board is answerable to the shareholders and that order should be respected and allowed. But for one man to go ahead and adopt all the powers as if the management of the CBN is one man’s business is unheard of. It can never happen in any enlightened and orderly society. So, the whole thing smacks of, I am sorry to say, ignorance. And the way banking system is run elsewhere I don’t think these managers of our CBN would have been allowed to continue with actions that would send us and our economy so many years backwards.

I have to tell you honestly that with this CBN style of banking sector management, nobody should continue to think of the actualization of the Vision 20: 20-20 dream.

Yes, there could be mismanagement of the bank by the management, but in what sense? Is it in unsecured loan? If that is the problem, then the board of the bank is still to be involved in finding ways of tackling the problem. An MD has limits in grant of loans, and every loan has accepted collateral to secure it. If a manager flouts the rule, the board has the power to discipline him, find a way of securing or recovering the loan or other reasonable steps that may be necessary. But blowing it out of proportion does not in any way solve the problem.

If the management went wrong by staffing the bank with unqualified manpower, that is another problem still left for the board to handle and there is a way out it. But there is never a time the solution will be someone sitting somewhere in Abuja and talking as if he has the ultimate and monopoly power of knowing everything about banking.

I was once a director representing the Federal Government in quite some banks, and sometimes, we jokingly discuss that most times when banking examiners come it is for the sake of formality. And if it is the same class of people I used to know who are after personal interest in their examination, I can’t imagine them being so patriotic to deliver a report of the real situation or state of the banks. I knew them as people who wrote a lot of irrelevances maybe because the people involved refused to play ball.
I feel so bad about this attitude of the CBN governor and to some extent about the Federal Ministry of Finance, because if the office knew what should be done the governor should be called to order before he does worse damage as he is boasting about taking on more banks. He has actually done so much damage that will take us generations to heal, what is the need watching him do more to bring total ruin to the economy beyond remedy.

What super humans are they in the Central Bank to take over and take charge of these banks and they are still bragging to do more. The boards of the banks are not there for nothing.
Even at my level then in the Ministry of Finance I used to advise the CBN governor on policies one felt was not too good. Sometimes he might visit me in my office or ask that I see him in his own office for a discussion on that. Nothing says the CBN governor knows all and should act as if he is the only one with knowledge of what should be done and at last expose the economy to serious problems instead of solving existing ones.

As a matter of fact, if the banks would tell you the truth, since the CBN started this destruction, deposits must have plunged drastically, and I am sure the culture of saving money under the pillow at home must have taken a rise because the depositor doesn’t trust the bank any more. Our meltdown, which others are already recovering from, is just commencing. I tell you that the CBN governor has caused our own local recession, which nobody knows when we will get out of it because he is still unrelenting in his ways and nobody wants to call him to order. We are certainly heading towards such crisis unless someone stops them. What is certain is that since the CBN governor has been allowed to continue the way he carries on, we are surely heading for worst times.

It looks to me like the CBN governor is probably knowledgeable in micro banking, bookkeeping, bank management and a good relationship in dealing with the customer. But the knowledge of the real banking, economic and monetary policies, which I will call macro banking is actually what you need to manage the CBN. It is a different case altogether because it is more of banking, monetary and economic policymaking and the effective combination of all.

However, I would not suggest to his employer to remove him, but if I had the power to do that myself or were his employer, I would not keep him.

[b]And after doing this much damage, he still boasts and announces that many more banks will still go. If what we read about him is true, that means the CBN Governor does not mean well for the economy or does not know what to do or how to manage the economy of a nation with his position.[/b]As I said earlier, there is recession – a time for downturn when activities slow down and production develops a negative trend. The major thing governments in other places do is to embark on projects that help to pump money back into the system and create jobs like real estate development.

Real estate or building projects is always the best option because it creates a lot of jobs, involves so many others sectors of the economy in procurement of items needed and creates assets that don’t depreciate in value easily. The materials they require from those sectors get them back on their feet. They don’t just dump money in banks as a way of fighting recession like we saw the CBN governor do after going against banks. I am even surprised that the Federal Government is not asking the governor questions on the reckless release of money to the involved banks.

I even ask if the banks the CBN is accusing were as reckless in issuing loans like the CBN has been in releasing money to them. What collateral has the CBN from the banks they are dumping money in to secure the liquidity? Because to retain these large sums of money in these same banks accused of non-prudent management is a question the CBN has not answered. At last we will find out that the problem will be worse than the one the accused banks created. The banks may have taken collateral for loans which are inadequate, but the CBN has ignored a basic rule of ensuring the banks have adequate facility to secure the money them pump into them to sustain the cash ratio balance.

To sustain my argument that the CBN investigation of the banks were grossly inadequate, I want to recall to you that few days after the CBN announced a bailout of N420b to the first five banks it moved against, these same banks said they didn’t need them because there were liquid enough. That goes to say that it is only in Nigeria what CBN is doing would be allowed to continue without a check. The FG in my view would have asked independent examiners to look at the books of the banks instead of allowing the CBN to run this type of show thereby making them the accuser, the jury and the judge.

The Federal Government for purposes of balance should not just accept everything they say as gospel truth.

My final word on this is that if the CBN is allowed to continue the way it does, I don’t see any light at the end of the tunnel for the commercial banks to retain their boldness, enjoy the confidence of the customer and play its vital role in the economy. That is why I keep saying that the federal government should put its feet down and save the situation from the hands of the CBN. The FG cannot save this economy without correcting this present inadequacy in the central bank. CBN is definitely not helping the economy or moving in the direction to do so. But if someone thinks otherwise and we decide to fold our arms and watch, we will see the doom very soon.

mbulela:

naijaking1,
it seems you see Sanusi in your dreams?
your obsession is beginning to bother on pure hatred.
for every one article you post here castigating this man, we can find two claiming he is on the right track by equally well schooled scholar like this monarch.
Sanusi did not send Okey Nwosu, Cecelia Ibru and co to run their banks aground.
There might be reservations about his method but thast does not exonerate the former bank MDs.
Stop acting like you are a foreigner (i assume you are a Nigerian) and do not know that these bankers are nothing short of cowboy economic thugs.
even the ones that are declared healthy are doubtful.
in a short while i will post a lengthy document one that i consider an unbiased report on the banking industry.
if only you can try and see issues devoid of your Sanusi hatred.
i will be back.

mbulela:

naijaking1,
it seems you see Sanusi in your dreams?
your obsession is beginning to bother on pure hatred.
for every one article you post here castigating this man, we can find two claiming he is on the right track by equally well schooled scholar like this monarch.
Sanusi did not send Okey Nwosu, Cecelia Ibru and co to run their banks aground.
There might be reservations about his method but thast does not exonerate the former bank MDs.
Stop acting like you are a foreigner (i assume you are a Nigerian) and do not know that these bankers are nothing short of cowboy economic thugs.
even the ones that are declared healthy are doubtful.
in a short while i will post a lengthy document one that i consider an unbiased report on the banking industry.
if only you can try and see issues devoid of your Sanusi hatred.
i will be back.

mbulela:

Naijaking1, you are muddling up tow different issue.
i will be grateful if we could separate them.
1. Sanusi's ability and competence
2. Ibru et al's gross mismanagement of the banks they headed.

on the first issue, while i refuse to agree that he is incompetent, i believe that his zeal has often let him down in an office where tact, conservatism and behind the scene actions are the hallmark of its holders.
Forget showbiz impresarios like Soludo, in serious climes reserve bank governors rarely speak,when they speak are very measured in their speech.They rarely give away their thoughts by their emotions in public and while they rarely say much in public, their ideologies are evident in the market and their effect are noticed in the economy.
i believe that not only those Sanusi talk too much but some times he seems not to realise the power that comes from being a reserve bank governor (assuming he is largely independent).
I do not doubt his ability but question his method at times.

on the issue o the sacking of the bank MDs, i am an ardent supporter of that move and believe that any thing less is a half hearted measure of addressing the issues at stake.
In my view, most of the banks are even guilty of similar offence but as a realist, i believe that we have to start from some where.
The case is in court, the sacked should enforce their rights from the courts not from inside the banking hall.
He had the power to effect heir sack and i believe it was the right thing to do.
You are not the only one who was patriotic in investing in Nigerian stock but even among those who invested, the discerning knew that it was a house built on spittle and lies.It was bound to fall.
hating Sanusi because you invested in NSE is a faulty approach.
hate those who built the house of sand with their bogus lies and deception.
I still wonder what Ndi Okereke is doing in NSE?

naijaking1:

Sanusi does not have the academic pedigree to run our nations top bank---apart from an Islamic studies in Sudan, the man could not even boast of certificates from any leading schools of economics of the World: London, Harvard, Yale,etc. He just didn't have it, and the World knows it.
I know you'll quote many previous governors who didn't have have such degrees, but this is 2009.
If he was not a Kano prince, do you think his meteorical rise in the banking industry could have been possible? You may say yes, but I definitely say NO.
Banking is more technical than people understand, just like engineering, accounting, law, surgery, etc. If you don't have it, no amount of politics would stop you from being exposed sooner or later.
The above article best summerizes the point I have been making to people for the last 3-4 months about the so-called mismangement by Ibru, and others.
There're better, more effective, legal, and even more punitive ways of dealing with them without destroying the whole banking industry in Nigeria.
Sanusi's stupidity doesn't only threaten the industry, but basically wiped out any shareholder who had money in those banks on the day he came to office.

citizenY:

^^^^^
@ naijaking and co

This retired expert wants caution, all well and good. I have not seen evidence of this man's prowess apart from being
a representative of the government on bank boards. A career civil servant who today are two for a penny. These
are the grandfathers of today's civil servants being accused of sabotaging government efforts at budget implementation
and service delivery. Could we accuse these guys of refusing to take the bull by the horns, in their time and subsequently
leading us into this mess we are in today in all spheres of our life? I do not always heed to pontificating yesterday's men.

I am really stunned that he suggests that the bank directors should be consulted where bank officials give out heavy unsecured
loans to themselves and their cronies. Hogwash, the same guys who were sharing the money?

We all know the ''everybody in financial circles'' being referred to - those who collect fat deposits from hardworking traders and
use some part to fund their ''peacock'' lifestyles. They give themselves fat salaries and flashy cars and punish us with incredibly high
interest rates. They give themselves rapid promotions and unsecured facilities at the expense of honest business people.

mbulela:

Naijaking1, you are muddling up tow different issue.
i will be grateful if we could separate them.
1. Sanusi's ability and competence
2. Ibru et al's gross mismanagement of the banks they headed.

Remii:

With all that has happened in this country some people are still worshiping this paper so called Certificates, lol. God will help you.

ndu_chucks:

Indeed, the jury is still out with respect to Sanusi's ability and competence.  

many of de people wey dey complain about sanusi lost money because of the gross mismanagement of de thieving ceos and their cohorts.

those victims of fraud, mismanagement, and outright theft, dey look for anyone to blame and sanusi be their favorite person to blame.

de victims go tell us say sanusi dey kill de banking industry. Nothing could be farther from de truth. de fired ceos killed many banks long before sanusi enter scene.  

people need to understand say, if you hide dead body for inside bedroom for long, nobody go know say dead body dey for ya house.  na when honest authority expose de dead body wey people go see say dead body don die and don rot for a very long time.

in fact, some relatives and other people wey get intimate relationship with de dead body,  go begin blame both the owner of de house, and de person wey find de dead body.

na de ting wey dey happen now be dat. for my analogy, na sanusi be de authority wey find dead body and de sacked ceos,incompetent and possibly thieving executives wey kill person and hide de body for bedroom.

to make matters worse, as sanusi dey carry dead body go for proper burial,  dead body come get accident for road.  now na double wahala for dead body and de owner of dead body. make we thank Allah for de talent of fela anikulapo kuti (rip).

Beaf:

Sanusi is a roughneck dealing in matters way above his head with agbero methods. If he is claiming that there has been mismanagement, does the solution lie in employing dynamite and stupidity?

Right from the man's first move, I have been shouting that he's methods are extreme. You cannot run the regulatory arm of the financial sector with barbaric methods, finance and banking are esoteric and academically sophisticated. We have the wrong man.

Remii:

Roughneck! That sound familiar, are you a toolpusher, I need one. lol.

citizenY:

@ naijaking,

This is sour grapes. Tell us your own pedigree which gives you the audacity to throw tantrums
anytime you realize that Sanusi is still the CBN governor. You should tell us why we should accept
your opinions on  financial matters and ignore the views of the sitting CBN governor and his management.

Where were you when he was being cleared, you should have petitioned your rep. From the way
you continue to rave and rant on this Sanusi matter, I am beginning to suspect say you no get paper
and even if you get self na Daily Times or West African Pilot .

mbulela:

@naijaking1
sometimes you come across as very naive.
i really wonder if you have lost touch with the realities of this country called Nigeria.
In Nigeria it is not the victim that looses the case.
He that shouts loudest wins.
That is the modus operandi of Ibru et al.

citizenY:

@ naijaking,

This is sour grapes. Tell us your own pedigree which gives you the audacity to throw tantrums
anytime you realize that Sanusi is still the CBN governor. You should tell us why we should accept
your opinions on  financial matters and ignore the views of the sitting CBN governor and his management.

Where were you when he was being cleared, you should have petitioned your rep. From the way
you continue to rave and rant on this Sanusi matter, I am beginning to suspect say you no get paper
and even if you get self na Daily Times or West African Pilot .

mbulela:

naijaking1 in this proverb lies a great truth that you are yet to grasp.
seek and you shall find.

naijaking1:

That doesn't make it right. There are court orders restraining people from discussing cases in certain ways, and yet Sanusi has not stopped calling people names.
No need, I'm not the CBN governor. Have you ever wondered why every US president has always gone to Harvard or Yale, or why most UK Pm have always attended Oxford or Cambridge?
Same in Banking- Imagine this news: "The Oxford educated governor of Nigeria's CBN has said----- vs. The Khartoum University educated CBN governor said-------


I wish I understand him

mbulela:

more importantly, where was he when Soludo was acting like a showbiz star and hugging the headlines with these banking cowboys while the industry was dying and in ruins.
He joined the crooks in peddling lies and half truths to convince us that all is well with the industry whlie it was not.
Now you develop hypertension and begin to stutter at every mention of Sanusi.

naijaking1:

Nobody said there were no problems with the banks, the point which you seem to ignore is that Sanusi has made it worse.
Where was I during Soludo, I don't know, the point was that my shares did well.
Calling people crooks without proof is sounding very much like Sanusi, you can do better.

naijaking1:

No need, I'm not the CBN governor. Have you ever wondered why every US president has always gone to Harvard or Yale, or why most UK Pm have always attended Oxford or Cambridge?
Same in Banking- Imagine this news: "The Oxford educated governor of Nigeria's CBN has said----- vs. The Khartoum University educated CBN governor said-------

mbulela:

Dude your are WRONG.
Tito Mboweni was South Africa's reserve bank governor for 10 years until two months ago and probably the most effective in the continent in the last decade.
go and look at his CV and see where he attended. it did not affect his effectiveness and he earned respect from all and sundry.
All the schools and top consultancies that Soludo has in his CV how did it affect his performance?
is it not the[b] same Oxford that Dimeji Bankole attended?[/b]
How different has he been from Etteh the hair dresser?
Dude, go low on this top school issue.
i would not want to say more on that note, some of these school reputations are more of elitism and marketing.
i have seen idiots that graduated from these places.

mbulela:

now i understand your problem.
your shares are doing badly now.
pele o

Remii:

Are you aware that the world economy, including US and UK is in reccession up till now, and these same flawless men of yours managed it to comatose?

MrCrackles:

Topic
And this coming from a monarch whose intellectual capabilities are questionable?
I laugh in my tea cup. . . .