Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards - Politics - Nairaland
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| Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by paddylo1(m): 2:26pm On Apr 08, 2010 |
SANUSI’S FIRST BANK: THE MAN’S HYPOCRISY AND DOUBLE STANDARDS Apr 6th, 2010 | By Victor Shodipo | Category: Issues The statement below is an excerpt from an Equity Research Report of StanbicIBTC Plc (StanbicIBTC is a leading investment firm and deeply involved in CBN’s reforms as Adviser) published in ThisDay of Sunday, March 21, 2010, page 31. “Given First Bank of Nigeria’s exposure to the oil and gas company SeaWolf, the bank faces risks of oil price volatility and instability in the oil and gas sector. The bank’s credit exposure to the company is currently about 29% of its shareholders’ funds. The CBN has instructed the bank to reduce its exposure to 20% by 31 March 2010. The bank intends to sell down its exposure to 15% but we do not believe this is likely because of the current low risk appetite in the (banking) industry”. In July 2007, First Bank provided SeaWolf a US$260m bridge facility for the following: • To acquire 100% of the equity of Mosvold Jack up Ltd (a publicly traded offshore drilling company quoted on the Norway Oslo Exchange) • To make scheduled payments for two rigs under construction (MSV 104 and MSV, renamed Oristetimeyin and Onome) • Make down payments for the purchase of West Titania (now Delta Queen) from Seadrill and; • Meet operational and administrative expenses. The global economic crisis, which resulted in a huge dip in oil prices, had a negative effect on the quality of the loan and the bank had to convert some of it to equity and also extend the duration due to low cash flows from the project. Source: Thisday, Sunday March 21, 2010. This loan to a single company is currently 29% of FBN shareholders’ funds according to the Stanbic IBTC Plc equity report. As at September 2009, First Bank’s Shareholders funds stood at N309 billion. 29% of this comes to N89 billion. This means First Bank’s current exposure to just a single loan is N89 billion well above the 20% limit set by the CBN! It is important to note that this loan is not performing as expected hence the bank’s initiative to convert part of the loan to equity and sell a portion. The Daily Independent Newspapers, it will be recalled on January 20, 2010, had done an extensive report on the shady dealings that went into this facility which was given when Mallam Sanusi was the Chief Risk Officer of First Bank and later supervised as its MD/CEO. Despite the fact that this loan is of doubtful recovery, the CBN under Mallam Sanusi turned a blind eye to this facility. First Bank’s total provision was N29 billion when it should not have been less than N118 billion if the provision for SeaWolf alone is added. This loan also raises more fundamental issues. • What sort of ‘Risk Expert’ will approve the granting of an N89 billion loan to a single company that as at the time of collecting the loan was less than a year old? • The Company was incorporated the same year (2007) it applied and got $260 million facility from First Bank of Nigeria Plc. • Is it not hypocrisy that the same Mallam Sanusi that recommended the approval of this loan now turns round and refers to other bank MDs’ as reckless? • What could be more reckless than risking 29% of your shareholders’ funds on a single obligor that has no track record in its industry of operation? • Is it not the same global economic crises that torpedoed this business that also affected the Nigerian stock market for which reason Mallam Sanusi invaded the targeted banks? The above report clearly further reveals the hypocrisy of the Mallam Sanusi’s largely personal attacks on the removed bank Managing Directors. This is a loan that has gone totally bad or at best has entered the stage of doubtful recovery. While CBN forced its captured banks to make full and immediate provision for all facilities of doubtful recovery on its books, Mallam Sanusi has secretly given First Bank up to 31 March 2010, to “reduce its exposure to 20% of shareholders funds.” Clearly, what is good for Sanusi at First Bank is not good for other banks. MR. AG PRESIDENT, NIGERIANS COUNT ON YOU TO RESTORE ECONOMIC SANITY AND PROGRESS. SIGNED VICTOR SHODIPO RENAISSANCE PROFESSIONALS [url]http://renaissanceprofessionals.com/2010/04/06/sanusi’s-first-bank-the-man’s-hypocrisy-and-double-standards/[/url] |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by paddylo1(m): 2:31pm On Apr 08, 2010 |
CBN Proposes New Loan Provisioning Regimes In a bid to adjust to the current economic realities necessitating lending to the critical sectors of the economy, the Central Bank of Nigeria (CBN) has proposed for banks new loan provisioning regimes and a framework for collateral adjustments for lost facilities. The board of the CBN is expected to approve this proposal – which will lead to a longer period of loan provisioning – when it meets in the middle of this month in Abuja, . . . . . . http://www.proshareng.com/news/singlenews.php?id=10096 Basically Sanusi has finally seen the light?, He now believes in Forbearance and giving the Banks a longer period to provision for bad loans, How come he didnt realize(what every central banker should know),that if u squeeze the banks too hard, u shut down the economy of any nation, U cant go about asking banks to do huge provisioning,which reduces available capital, and expect banks to then turn around and increase lending |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by tkb417(m): 2:35pm On Apr 08, 2010 |
i think i have done some work on this seawolf thing over the last 2-3 yrs and ill say some of these things are inflated i dont think First Bank is in any trouble as a result of their investment in seawolf i dont think so |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by paddylo1(m): 2:42pm On Apr 08, 2010 |
i think i have done some work on this seawolf thing over the last 2-3 yrs and ill say some of these things are inflatedNo me neither, i dont think First bank is in trouble, besides oil prices have rebounded and will continue to do so till perhaps 2012, The issue is the hypocrisy of Sanusi,in asking for immediate and full provisioning for other banks(in effect making them insolvent),while giving first bank a yr to do it Now he has apparently seen the foolishness of his action,and the CBN is now proposing new Provisioning regimes for banks ranging from 1 - 3yrs(see my link in 2nd post above) |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by tkb417(m): 2:48pm On Apr 08, 2010 |
paddy_lo:i agree with you in a way. . . . lemme read the link |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by DisGuy: 3:24pm On Apr 08, 2010 |
I read. . . In a bid to adjust to the current economic realities necessitating lending to the critical sectors of the economy, the Central Bank of Nigeria (CBN) has proposed [size=14pt]for banks new loan provisioning regimes[/size] and a framework for collateral adjustments for lost facilities. The board of the CBN is expected to approve this proposal – which will lead to a longer period of loan provisioning – when it meets in the middle of this month in Abuja.proshare new loan you wrote paddy_lo: so how does this affect FBN old loans? Why cant nigerian journalist include experts opinion or reaction to new or proposed policies, instead of leaving us with political twisters |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by biina: 5:17pm On Apr 08, 2010 |
paddy_lo:seen the light?  You seem to be confusing issues.There was a provisioning scheme in place that the banks were not adhering to. The CBN made them comply and resulted in some banks being insolvent. Should Sanusi have enacted a review and back dated it? |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by biina: 5:21pm On Apr 08, 2010 |
paddy_lo:Would that require that the loan be non-performing for a year? |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by RoadStar: 5:09pm On Apr 09, 2010 |
biina: The reason a suposedly learned economist and banker was hired to head the CBN was because, he would be required to make consecions and forebearances in special situations. If it was all about reading and sticking to already written laws then an administrator of any sort could've been hired. Maybe a headmaster, ex-police or army pesonell with track record of administrating with an ability to read and write in english would've been more suitable. There is a difference between ideals and real situations always. |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by realmen: 12:05am On Apr 10, 2010 |
biina: the simple fact is that provisioning for non performing loans as stages and percentage, and banks according tho the financial standard being used b4 sanusi came in, spread the provision over a period of time. but sanusi just came and said the all banks must do 100% provision. that makes many of them to made provision in excess of their liquidity or leaving them with insufficient deposit base. that explain why many of the banks are feeling relunctant to submit their financials to cbn then to publicize it. they prefer to be paying the penalty of 10k per day than to expose their yash or to be the first to show poor figures. now , sanusi (CBN) want to go back to the old stye to spread the provisioning. |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by naijaking1: 6:27am On Apr 10, 2010 |
What sort of collateral did seawolf have? I hope landed property as large as Kano state  |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by biina: 7:06am On Apr 10, 2010 |
realmen:Thats incorrect and a misrepresentation of the facts. There are standards for classifying loans as non-performing assets and provisioning for them, which are clearly defined in the SAS 10 as - Interest and/or Principal outstanding for over 90 days but less than 180 days to be classified as 'Substandard' and provisioned at 10% - Interest and/or Principal outstanding for over 180 days but less than 360 days to be classified as 'Doubtful' and provisioned at 50% - Interest and/or Principal outstanding for over 360 days to be classified as 'Lost' and provisioned at 100% So if the loan has been outstanding for a year, you will need to provision 100% for it. Sanusi didn't write the SAS, the NASB publishes it and the current version has been in existence before Sanusi came into office. He simply required that the bank adhere to it and provide a true picture of their state. In fact, the CBN got a waiver from NASB to suspend the paragraph requiring 1% general provisioning on performing loans to reduce the burden on the banks for the 2009 year (see http://www.nasbnigeria.org/news.php?news_id=7). He is also trying to review the requirements to make it easier for banks to provision, but it would be wrong to make the changes and apply them retroactively. |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by naijaking1: 7:26am On Apr 10, 2010 |
^^^ Did Ibru or Akingbola write the SAS? Yet some of them have been persecuted for "giving out loans without adequate or no colleteral" Your hypocrasy stinks to high heaven  |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by biina: 7:57am On Apr 10, 2010 |
naijaking1:Try not to make such declarative comments on issues you are less knowledgeable. The Statements of Accounting Standards (SAS), which is published by the NASB, defines guidelines and principles to be observed in the preparation of financial statements. Specifically SAS 10 & 15 applies to Accounting by Banks and Non-Bank Financial Institutions. It is the SAS that defines how much provisioning should be made for non-performing loans, and has nothing to do with the due process of how the loan was granted (which is where collateral falls). Every company in Nigeria is expected to comply with the relevant SAS (or ICAN substitute for smaller entities). Failure to adhere to the SAS is tantamount to doctoring your books. |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by naijaking1: 8:05pm On Apr 10, 2010 |
biina: Once again, my question: since Sanusi didn't write the SAS while giving loans worth billions to Seawolf, did Ibru and Akingbola write the SAS while giving the loans Sanusi has dragged them about town for? |
| Re: Sanusi’s First Bank: The Man’s Hypocrisy And Double Standards by biina: 11:37pm On Apr 10, 2010 |
naijaking1:and I have told you that the SAS has nothing to do with the terms of a loan. It defines the rules for proper accounting. If a loan is non-performing i.e. non-payment of interest and/or principal when due for 3 or more months, the SAS defines that the bank provision a specific fraction of its value. This has nothing to due with whether the loan was issued with or without collateral. They are two different things. |
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