•Banks’ recapitalisation to be concluded Sept
By Ayodele Aminu, 06.07.2010

Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi has said that he has no problem with President Goodluck Jonathan and that the President is in support of the banking reforms.

Sanusi, who spoke with THISDAY Board of Editors in an interview last night in Abuja, also said universal banking licence issued to banks in 2000 was illegal.He also said he expects the rescued banks to have been recapitalised by September this year.

Speaking on his relationship with President Jonathan, the CBN Governor said: “Dr Jonathan I know and I have known at every point in time has approved the decisions that we took at Yar’Adua’s time and said that we should go ahead with the decisions. So I have always briefed him and I have always gotten the impression that he has continued to support what we are doing.

“But there are people who try to make it seem there was something wrong, like the newspapers saying what they have heard from Presidency sources in the Villa and these sources may be gardeners and what have you, sources in the Villa, without specifying.
“But the Governor of a Central Bank does not dwell on what people say the President is thinking until the President talks to him directly and I have never refused any invitation from the President. And If the President himself did not tell me nobody around him can claim to be speaking for him.”


On the late President Umaru Musa Yar’Adua, Sanusi said  he was a great leader who did not interfere with what the CBN was doing even when the interests of his friends and family were concerned.Sanusi, who explained why all the 24 banks in the country needed to be categorised, said universal banking was illegal because it was not included in the Banking and Other Financial Institutions Act (BOFIA).


“If you read BOFIA, it says you can extend banking operations but excluded Insurance and stock-broking from the type of business, which banks can veer into,” he said.Noting that there was a bill for bank’s categorisation that never sailed through, Sanusi explained that what CBN is doing now is “to correct the wrong,” – just like in other jurisdictions like United States of America, which has also separated banking from propriety trading.


Universal banking parlance means banks becoming one-stop shops, offering a range of financial services - insurance, mortgage, stock broking, merchant banking, commercial banking and bureau de change - under one group. It was introduced by the immediate past CBN Governor, Prof. Chukwuma Soludo.


But this has often been criticised by Sanusi, who said the banks are putting shareholders’ funds at risk and are not concentrating on their areas of core competence. Justifying the need to phase out universal banking, he said the amount of capital a bank has must be tied to the level of risks it takes.


“It is not only capital differentiation we are talking about. If you are a global bank you must operate international best practices and prepare your accounts in line with the International Financial Reporting Standard,” he explained.
On the recapitalisation of the rescued banks, he confirmed that at least each of these banks have institutions that have indicated interest in them and was optimistic that by September this year, the rescued banks would have concluded their recapitalization exercises.


Sanusi said he expects detailed due diligence of the rescued banks to have been completed by end of July.
Explaining why interest rates charged by banks are still on the high side, he said the high operating costs of banks was responsible.


“In most banks, 65 per cent of the banks’ employees are doing the back office work, while the remaining 35 per cent, which are core staff do real banking job and therefore have to work to pay themselves and the remaining 65 per cent that constitute bulk of the staff. In India, a single company provides back office for eight companies. So, why can banks share costs, he asked.
Consequently, he said the CBN has kicked off a shared services project that approaches industry cost in a strategic manner to bring down the banking industry’s operations cost by 30 per cent in the next three years.


Commenting on his one-year anniversary as the CBN governor, he gave himself thumps up, saying that the CBN under his administration, has been able to take major decisions regulators have been unable to implement.
He listed some of such decisions to include the banks’ common year end, code of corporate governance for bank directors asking them to leave after 12 years and the Asset Management Company of Nigeria (AMCON) expected to purchase the rescued banks’ asset and inject liquidity to enable them resume lending.


He also said the apex bank has changed the mindset of banks from seeing themselves as agencies for profiteering as they now see themselves as financial intermediaries and critical avenues for directing liquidity into the real sector of the economy.
“We have also proved that we have capacity to take major decisions where operators are resisting,” he said.


Asked if he had any regret about some of the decisions he has taken so far, he said he had no regrets because all of the decisions were taken “based on the best interest of the country and advice and information we have.”
On criticism of his reforms – especially those from prominent Northerners like the National Security Adviser, Alhaji Aliyu Gusau and lately from the Sultan of Sokoto, Alhaji Saa’d Abubakar 111, Sanusi said before he responds to any critic, the first question he asks himself is if such people are speaking in their area of expertise.


“I don’t think about my critics as Northerners or Southerners. Some speak based on what they are told, while others speak without having complete information on what they are speaking about. The Sultan is of Sokoto is not an Economist and NSA is not an Economist.
“ So given the family where I come from, I would never reply the Sultan on the pages of newspapers.  I was with the Sultan a few days ago up until 1am. We had a family discussion with each other, details of which I will never make public,” he said.
•Full interview on Wedne-sday

^ ^ ^

“ In most banks, 65 per cent of the
banks’ employees are doing the back
office work, while the remaining 35
per cent, which are core staff do real
banking job and therefore have to
work to pay themselves and the
remaining 65 per cent that constitute
bulk of the staff. In India, a single
company provides back office for
eight companies. So, why can banks
share costs, he asked.
Consequently, he said the CBN has
kicked off a shared services project
that approaches industry cost in a
strategic manner to bring down the
banking industry ’s operations cost
by 30 per cent in the next three
years.
This man no dey think straight o! So him want make dem sack 65 percent of workers!

Errr. . . Am I missing sumn?

Maybe I'm a bit slow; but from the topic, is the interview not supposed to be with Jonathan & not Sanusi?

The quality of reporting ain't impressive. Whoever edited that piece? Grammar errors, typos. . .

freezy:

Errr. . . Am I missing sumn?

Maybe I'm a bit slow; but from the topic, is the interview not supposed to be with Jonathan & not Sanusi?

The quality of reporting ain't impressive. Whoever edited that piece? Grammar errors, typos. . .

You're right.
Moderator(no matter what maybe your position on this issue), please edit the title of this thread to reflect the true content of this article.
How about-- Reforms: Sanusi thinks Jonathan supports him

naijaking1:

You're right.
Moderator(no matter what maybe your position on this issue), please edit the title of this thread to reflect the true content of this article.
How about-- Reforms: Sanusi thinks Jonathan supports him

That was the exact title on the Thisday article.
Write to Thisday and ask them to reword the title.
Your bile against Sanusi is beginning to get irrational.
Try and get a grip and take it easy.

mbulela:

That was the exact title on the Thisday article.
Write to Thisday and ask them to reword the title.
Your bile against Sanusi is beginning to get irrational.
Try and get a grip and take it easy.

What's irrational is certainly your unbalanced, myopic, and questionably corrupt advocate for Sanusi. Maybe, you're one of those CBN workers who are actually paid to produce rapid fire response to all and every critical comment about the "boss" within a few minutes. If Thisday captions this "adverotrial" incorrectly, does that mean we too should be fooled

If your irritation arises from posting a stupid and self-glorifying article by Sanusi, and expecting nobody on N/L to challange you, sorry, I've got news for you.
You can celebrate your one year anniversary-in-office elsewhere, but not where intelligent people are likely to notice. Maybe, you should really join him in one of his many road-shows, instead of coming here to express unfounded irritation based on people not swallowing your propaganda hook-sinker and line. Now, we know who's going to get sick worrying and trying to defend Sanusi.

naijaking1:

What's irrational is certainly your unbalanced, myopic, and questionably corrupt advocate for Sanusi. Maybe, you're one of those CBN workers who are actually paid to produce rapid fire response to all and every critical comment about the "boss" within a few minutes. If Thisday captions this "adverotrial" incorrectly, does that mean we too should be fooled

If your irritation arises from posting a silly and self-glorifying article by Sanusi, and expecting nobody on N/L to challange you, sorry, I've got news for you.
You can celebrate your one year anniversary-in-office elsewhere, but not where intelligent people are likely to notice. Maybe, you should really join him in one of his many road-shows, instead of coming here to express unfounded irritation based on people not swallowing your propaganda hook-sinker and line. Now, we know who's going to get sick worrying and trying to defend Sanusi.

hehe
will you go back to papabrownes thread where he said the minister of finance dissed SLS
go and read your comment even when it was glaring the title was misleading
i didnt see you raise dust that time o

in this case, Mbulela has only posted the news/title the way a nigerian newspaper has told the story
what is his offence?
Naijaking, easy o

I do not know Tunde Fagbenle to be an ass licker, to use NL's words, but he says this of SLS: http://www.punchng.com/Articl.aspx?theartic=Art201006061521315

Of course, he looks at issue here more from political rather than economic perspective, and he is not an authority, but this cannot be dismissed with a wave of hands as well.

tkb417:

hehe
will you go back to papabrownes thread where he said the minister of finance dissed SLS
go and read your comment even when it was glaring the title was misleading
i didnt see you raise dust that time o

in this case, Mbulela has only posted the news/title the way a nigerian newspaper has told the story
what is his offence?
Naijaking, easy o

i give up on the guy.
He is a lost cause.
That was my last exchange with him.
His irrationality is bewildering.
Never again.

^^^^^
no vex for am

na money matter

its easier to blame one semi illiterate gworo aboki than some suave award winning bankers for the crash of the stock market

mbulela:

Universal banking parlance means banks becoming one-stop shops, offering a range of financial services - insurance, mortgage, stock broking, merchant banking, commercial banking and bureau de change - under one group. It was introduced by the immediate past CBN Governor, Prof. Chukwuma Soludo.

“If you read BOFIA, it says you can extend banking operations but excluded Insurance and stock-broking from the type of business, which banks can veer into,” he said.Noting that there was a bill for bank’s categorisation that never sailed through, Sanusi explained that what CBN is doing now is “to correct the wrong,” – just like in other jurisdictions like United States of America, which has also separated banking from propriety trading.

Universal banking is the prevalent model of banking in Europe, UK and emerging markets, after the recession, the US tilted towards universal banking (contrary to Sanusis comments) having abandoned their investment banking models prompting banks like Goldman Sachs to apply for commercial banking licences.

Banks like RBS are selling their non-core banking units but this is as a results of restructuring within the banking institution which is heavily indebted to the taxpayer and not as a result of regulation from the government.

With Barclays capital buying up the Lehman brothers investment divisions in US.

Sanusis above comment therefore is very misleading and far from the truth.

RoadStar:

Universal banking is the prevalent model of banking in Europe, UK and emerging markets, after the recession, the US tilted towards universal banking (contrary to Sanusis comments) having abandoned their investment banking models prompting banks like Goldman Sachs to apply for commercial banking licences.

Banks like RBS are selling their non-core banking units but this is as a results of restructuring within the banking institution which is heavily indebted to the taxpayer and not as a result of regulation from the government.

With Barclays capital buying up the Lehman brothers investment divisions in US.

Sanusis above comment therefore is very misleading and far from the truth.

Goldman Sachs had to apply for a commercial banking license to be eligible to partake in the US Govts. bail out package - they would have gone bankrupt otherwise.

ADint:


Goldman Sachs had to apply for a commercial banking license to be eligible to partake in the US Govts. bail out package - they would have gone bankrupt otherwise.

The fact is that the US government arm twisted Goldman (and any other investment bank) into taking a commercial licence.
By doing so the US has indirectly forced all banks to become more or less universal.

About goldman going burst, subsequent facts and comments from analysts including goldman themselves point to the fact that they just took advantage of the situation.

We all ought to be well informed in Nigeria, espedially our policy makers.

@ Roadstar,

No commercial bank has ever been forced to obtain Investment banking licence. Geithner and Vince Gables continuous calls to break up big banks is antithetal to the Universal banking model.

US Govt wanted some Investment Banks to become Commerical because commercial are subject to tighter regulation and restrictions. On the other hand, no commercial has ever been asked to take up Investment banking so your assertion is false.

RoadStar:

The fact is that the US government arm twisted Goldman (and any other investment bank) into taking a commercial licence.
By doing so the US has indirectly forced all banks to become more or less universal.

About goldman going burst, subsequent facts and comments from analysts including goldman themselves point to the fact that they just took advantage of the situation.

We all ought to be well informed in Nigeria, espedially our policy makers.

They would say that now, won't they? If Lehman Brothers had been able to "take advantage of the situation" they would have survived as well. They and those 'analysts' will now have been saying the same thing as above.


"Six months after accepting a[b] financial lifeline from Washington[/b], a newly profitable Goldman Sachs is pushing to return the billions of taxpayer dollars that it received in an effort to extricate itself from heightened government control.

Goldman, which rode out the final, tumultuous months of 2008 with the help of a federal rescue, reported strong quarterly profits on Monday and said that it would seek to raise money in the capital markets to repay the government."

http://www.nytimes.com/2009/04/15/business/15goldman.html

Would that solve the challenges they are facing?

Observations from the above report;

(1) Universal Banking License issued to banks in the year 2000 was illegal (Quote from Sanusi).

(2) It was introduced by the immediate past CBN governor, Prof. Chukwuma Soludo.

QUESTION: WAS SOLUDO THE CBN GOVERNOR IN THE YEAR, 2000?

Report full of errrorrrrrrrrrrrrrrrrrrrr please.

I dont think it is a bad idea for banks to go into other financial business like mortgage and insurance, etc. The banks have the money now and they can venture into other things and creat employment oppurtunities which i think we have achieved since 2000.

I am begening to dislike Sanusi's econmic policies cos they have heightened unemployment in Nigeria.
In one of his reasons for scrapping universal banking, he said that banks will not concentrate on there services in commercial banking. But i want to disagree with him owing to the fact that these banks have different management for each institution , so wont affect them.

As far as am concerned, universal banking encourages employment.
If the banks dont establish these other bodies, who will

good idea. The CBN nids reformation

Ibime:

@ Roadstar,

No commercial bank has ever been forced to obtain Investment banking licence. Geithner and Vince Gables continuous calls to break up big banks is antithetal to the Universal banking model.

US Govt wanted some Investment Banks to become Commerical because commercial are subject to tighter regulation and restrictions. On the other hand, no commercial has ever been asked to take up Investment banking so your assertion is false.

Mr man, you're missing the point totally.
I never said US government forced all its banks to become investment banks. (neither do I see how that applies to Nigeria)
But they arm twisted the likes of goldman sachs to become more universal. (they initially being investment banks now had to take up commercial licences).
What I was trying to say is that Sanusi claiming that the universal banking model was being reversed is actually untrue, since investment banks were forced to take up commercial licences in US simple !
The Investment banking model is history in the US.
In Nigerias case the CBN is forcing hitherto universal banks to either take up specialised licences, which is completely in a different direction to what the US has done.

You need to do a major research into the banking models of the major banks in EU, UK and Asia including China.
They are primarily universal. That is my point.

In Nigeria, commercial banks were forced to take up Investment banking (and vice-versa) or lose their licence. That is not, and has never been the case in UK/US. We have many regional banks over here, mainly dealing with the day to day needs of their locality.

If your assertion is correct, we would see Commercial banks being pressurised to take up Investment banking by the authorities. . . . which is patently not the case. The fact is that GS was forced to take up Commerical banking licence in US because there is a difference in regulation between Commerical and Investment banks in US which does not apply in Europe. . . . in other words, The Treasury wanted to be able to keep an eye on Goldman.

nice

Ibime:

In Nigeria, [b]commercial banks were forced to take up Investment banking (and vice-versa) or lose their licence. [/b]That is not, and has never been the case in UK/US. We have many regional banks over here, mainly dealing with the day to day needs of their locality.

If your assertion is correct, we would see Commercial banks being pressurised to take up Investment banking by the authorities. . . . which is patently not the case. The fact is that GS was forced to take up Commerical banking licence in US because there is a difference in regulation between Commerical and Investment banks in US which does not apply in Europe. . . . in other words, The Treasury wanted to be able to keep an eye on Goldman.

I don't know if you are following the topic at all.

Ok, let us forget GS and focus on the issue.
The question is, does the US, UK, Europe or China have any rules which forbids a bank from operating on a universal capacity, like Sanusi is implying ?
Did the US or any country for that matter recently adopt any rule or legislation which restricts the scope of an individual banking operations ?

On Nigerian banks being forced to take up investment bank functions is a big lie.
The CBN only gave out banking licences on a universal capacity.
Whether u operate at all your available capacities is entirely up to the bank.

Mind you, universal banking is not only about commercial and investment banks only.

One of my medical school professors used to boast: "As Ghana goes, so does Nigeria" His statement was predicated on historical events before and during the slave trade era, independence from Britain, military incursion into civilian politics, etc.
While the Ghananian and Nigerian banking laws may not be similar to the letters, both countries share one basic principle: respect for the law, and acknowldgement of individuals' basic human right.

Most interestingly, this judge observed that this Nigerian born bank CEO was not given any opportunity to defend himself, before he was thrown out. It certainly sounds very familiar? It does, because I don't remember that any of our 5 CEOs was giving an opportunity to defend him/herself before they were clamped into jail, labelled with all sorts of malevolent titles, and their properties put into jeopardy by Sanusi.
While the Nigerian cases wind their ways through our own legal networks, it's refreshing to note what's happening in Ghana, because afterall "as Ghana goes, so does Nigeria"

[size=18pt]Court declares removal of Nigerian MD of Ghanaian Bank illegal [/size]

Thursday, 10 June 2010 01:14

Abdul Imoyo

The seemingly frosty relationship between Nigerian business community and their Ghanaian counterpart has been further demystified by a Ghanaian High Court that quashed and declared illegal, the removal of Wole Ajomale, a Nigerian, as managing director of Amalgamated Bank of Ghana.
BusinessDay learnt that Ajomale had challenged his removal as managing director by the Bank of Ghana via its letter dated March 3, 2009, titled ‘Serious Violations of the Foreign Exchange Act 2006’. The judgement, according to economy watchers, comes as a welcome relief to the Nigerian community in Ghana especially in the wake of several reports of seeming persecution of Nigerians and Nigerian businesses in Ghana by the government and its agencies.

The judgement is also coming on the heels of earlier declaration by Ghana’s minister of trade and industry, Hannah Tetteh, who maintained in an interview with BusinessDay that the country’s action against Nigerian businesses was in compliance with the rules.

Ajomale, not convinced of the grounds for his removal as the MD of Amalgamated Bank had challenged the action in court and sought amongst others the following reliefs: A declaration that upon a true and proper construction of the Banking Act of 2004 as amended in 2007, that the Bank of Ghana has no power/discretion to declare that his conduct undermines the trust and confidence reserved for a managing director, without affording him a fair hearing. He had further asked the court to declare the action of Bank of Ghana as a violation of the principle of national justice and the maxim of audi altrem partem and to therefore declare the action null and void.

“A declaration that the bank had no powers to convict or sanction him under the Foreign Exchange Act of 2006, and as such makes its action under same illegal; declare the actions of the Bank of Ghana with respect to his removal on such faulty ground as ultra vires and quash same.”

In giving his ruling, Justice Paul Dery of the High Court, Human Rights Division, said the two issues that needed to be determined were whether the Bank of Ghana had powers to impose fines or sanctions under the Foreign Exchange Act and secondly, whether Ajomale was afforded a fair hearing before sanctions were imposed. The judge ruled that there was nowhere in the Foreign Exchange Act that empowers Bank of Ghana to impose fines or sanctions, saying this was an exclusive preserve of a court of competent jurisdiction. Hence the action of Bank of Ghana has no lawful basis and was therefore null and void.

He went further to state that the bank cannot claim it took the action under the Banking Act when the letter conveying its decision clearly stated ‘Serious Violations of the Foreign Exchange Act’. The judge further held that even the sections of the Banking Act based on which the fines were imposed did not relate to violations of foreign exchange transactions and therefore inapplicable.

On the second issue, Justice Paul Dery noted the lies made by the bank’s official to the effect that Ajomale was at a meeting where the decision was taken.

http://www.nigeriamasterweb.com/paperfrmes.html

I have got two job offers from lafarge wapco and stanbic ibtc(I.T. Dept) and i am kinda confused on which one to choose.i'm a graduate of chemical engineering and i am also passionate about infotech but i dont know which career choice would be wiser.Any advice in this regard will be highly appreciated.Thanks y'all

I have always known sanusi to be a liar. There is no truth in him. We all know this and let us stop following a man that is not straight forward. His beef for others do not allow him to think straight. He hates Soludo and I dont know why he shows it. He always claims he is correcting all the wrong things Soludo did. I laugh. Let Sanusi know that no matter what he does, Soludo pass am. The more he tries to ridicule Soludo, the more unproffesional he (Sanusi) becomes. Sanusi says na operation cost caused high intrest rate, which operation cost again? shebi he don sack all the staff of the banks finish?

Naijaking1, not to worry, it is a matter of time, some of those sacked 5 mds will surely come back, they were removed illegally. Please NLanders should not take me for a supporter of crime and corruption, I just feel normal procedures and due process should be followed in punishing offenders.

Remember the case of Alonge in first bank in 2004 or so - i cant really remeber the year he was illegally removed as md by the board. The court restored him this year and first bank had to "bribe him not to come back".

One of my theories thoery in life is that once somebody I trust lies once, twice or thrice to me. I cease to trust him. Sanusi has lied to us many times. He takes us for fools in this country. God will help us.

wen did sanusi bcomes jonathans spokesman nonsence!!!

odedele:

wen did sanusi bcomes jonathans spokesman nonsence!!!

For all those people supporting Sanusi, this should be their greatest headache, because Sanusi can't seem to keep his mouth shot, or his mind focused on his job as the nation's chief economist.
At one time he sounds like the Inspector General of police, warning about crimes, at the other time, you would mistake him for the minister of finance when he speaks about jobs, unemployment, and funds to farmers and airline industry. Then, at other times, Sanusi wakes up thinking he's the Archbishop of Nigeria Nigeria or the Grand Iman of the nation when speaks about morality and selfishness in the society.
Can somebody please remind him to focus on our economy