World Bank Concerned About Of Sanusi's Monetary Policies

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Concern In World Bank Over Sanusi's Bank Reforms

By Emma Chukwuanukwu, Assistant News Editor and Adeola Yusuf , Correspondent, Lagos

There is growing concern among officials of the World Bank and other international credit lending bodies over the ongoing reform in the Nigerian banks, aftermath of the sack of some bank chiefs recently by the Central Bank of Nigeria (CBN) Governor, Lamido Sanusi.

The World Bank and other international lending institutions that support both the government and private business organisations in Nigeria are said to be raising queries over the recent actions of the CBN. Sanusi sacked five bank chief executives on August 14 and handed them over to the security agencies for criminal trial in the courts.

The Chief Executive Officers of Oceanic (Cecelia Ibru), Intercontinental (Erastus Akingbola), Afribank (Sebastine Adigwe), Finbank (Okey Nwosu) and Union bank (Barthelomew Ebong) as well as those of some of their subsidiaries were affected by Sanusi's action and are being prosecuted by the Economic and Financial Crimes Commission (EFCC).

An official of the World Bank, who pleaded not to be mentioned, told Sunday Independent that the apex world financial institution was particularly concerned about the legality or otherwise of the CBN actions, especially as it concerns the N400 billion bail out extended to the troubled banks without an enabling law by the nation's National Assembly.

"What the CBN has done may have saved the banks in question from going under, but it has also definitely affected Nigeria's international credit rating negatively. The international financial institutions now view Nigerian government and businesses with suspicion as regards their credit rating.

"They are not comfortable that the CBN governor could release such a huge sum of money to privately owned banks without an enabling law by the National Assembly and I think that is what Mr. Sanusi has been labouring to explain to them during his trips to London and China recently," said the official.

Especially disconcerting to the international financial community, according to the official, was the explanation Sanusi gave in London to the effect that the CBN had to print money to shore up the dwindling capital base of the five troubled banks. "They were taken aback that Sanusi could do all that without an enabling law by the National Assembly," the official said.

The World Bank official said corresponding financial institutions overseas which lend money to Nigerian businesses may stop such credit facilities until confidence is restored in the Nigerian financial sector.

"You are aware that some banks abroad give short term loans to Nigerian businessmen, especially importers of finished goods. Some of the foreign banks may not extend such loans now, especially as the credit facilities are guaranteed by some Nigerian banks, including the five troubled ones.

"Another source of worry to the international financial institutions is the silence of the Nigerian authorities on the CBN action. Although, the authorities have said they support the action by the CBN governor, they did not say whether it was part of the government's economic reform policy and state the direction it is going. "They are still confused about how the CBN could invest public funds to shore up the working capital of privately owned banks without explaining whether it was a loan or equity fund and how it would be returned to the public purse. These are very sensitive issues to the banks abroad, especially in these days of economic meltdown when most of them are struggling to stay afloat," he said.

He said most importers would soon feel the impact of the reactions of their foreign lenders except the Federal Government moves fast to clear their areas of anxiety. Particularly at risk are the major importers of refined petroleum products who often use such credit lines to sustain regular importation of fuel into Nigeria.

A major fuel shortage, which could ground Nigeria's economy to a halt is looming as banks have placed restrictions on lending to major oil marketers who are responsible for the importation of over 60 per cent of petroleum products into the country.

Investigations by Sunday Independent revealed that many marketers are already running short of funds.

Lending banks, it would be recalled, took to this new measure following the on going auditing of their operations by the CBN, which has led to the arrest and continued detention of many banks' CEO.

Executive Secretary of the Major Oil Marketers Association of Nigeria, (MOMAN), Thomas Olawore confirmed the threat of withheld credit for the petroleum products importers, adding that MOMAN has communicated its predicament to the Federal Government and requested its urgent intervention.

" Our members, especially those whose names appeared on the CBN debtors list have complained that their letters of credit are not being honoured by the corresponding banks abroad. If the government does not act fast, this situation may affect the importation of petroleum products into Nigeria soon.

"I have sent mails to members on this subject and as you can see I am still waiting for their response before we can know how best to answer the questions," he told this newspaper in a telephone chat.

A Managing Director of one of the major marketing companies, who spoke with Sunday Independent, noted that the country would be sorry for the actions of the CBN governor if not properly and urgently modified.

He said further that it is not possible to avoid a fresh rounds of petroleum products scarcity as most marketers and importers are now faced with the problem of trust from corresponding banks as letters of credit from Nigerian banks are not being honoured by the corresponding banks.

The impact of Yar'dua's Sanusi's monetary policy is becoming more apparent

Your analogy with US and Obama are totally wrong.
Your comparison with the money passed by congress and the money printed by Sanusi are laughable, Are you ever going to learn?

The U.S Treasury needed Congress's approval to borrow money from the Federal Reserve to buy shares of banks and other institutions that were systematically important to the economy.

The CBN gave a Tier 2 Capital (type of loan) to banks using its own asset (money). If the Ministry of Finance wanted to borrow money and buy shares of banks and companies listed on the Nigeria Stock Exchange (NSE), then it will need the National Assembly approval.
 

As long as the Tier 2 capital is not used as a government means of stealing privately owned banks. Oceanic bank is valued at about 3 trillion naira, Sanusi injects a paltry 100 billion or less, then he rushes to appoint his own managing director.
That's clearly an abuse of the system and probably worse than the problem he claims to be trying to correct.

Mallam, I thank you. I defend principles, not persons. If Akingbola and others appear as victims of unjust principle, I tend to defend them, and I think you should too, despite answering a fake Igbo name, and having very strong Arewa agenda. If you don't defend an unjust principle, sooner or later, it might become your turn to suffer.

If you, me , or Akingbola is accussed of any crime, it's natural to be given an opportunity to defend ourselves---why do you have a problem with that?
Trust me if at the end of the day, these people are convicted, I'll be one of those to should for their heads, but until then, let civility reign.

You're Chuks Ndu, Ndu-chucks, or Chucks Ndu, just like I am Sarkin Kano!. Calling you mallam is with the greatest respect. Anyway, let's not turn this into personal issues.
There're banking rules, and there're punishment for going against those rules, who would know better than the Nigerian Institute of bankers. I don't support people taking or borrowing money from the banks so much so that the banks will collapse, nobody does.

But, just because you suspect that to be the case, doesn't mean you should break every rule known to man to "prevent" banks from collapsing. Like I said in another thread, there's more to banking than just risk management.

I don't support any CEO, who is convicted of stealing money, but we must assume they are innocent until proven otherwise, that's what the western philosophy we're pursuing says. Islamic philosophy might have said something different, but the one I know says, try them, judge them, convict them; before they're called criminals.

We're not going to line up and stone them to death just because Sanusi cried foul.

naijaking, you dey mixup 2 issues in an apparent dishonest attempt wey you wan take put wool cover our eyes. de principle of presumption of innocense na good ting and up till now, no court don convict de CEOs of any finacila crime.  court system go determine their innocense or guilt in due time.

de second issue be say, regulatory agency (CBN) talk say these banks through their CEOs issue gazillion naira worth of non performing loans.  as de loans don turn out to be bad loans, no be the CEOs and the board dey responsible?  we no need court system to tell us this obvious fact. non of de CEOs dispute say dem give out de loans, they all gree say de loans dey bad. na de CEOs make bad decision and na their responsibility to safeguard depositor's and sharholders funds wey dem don abdicate.  dis issue dey too plain and simple and I no understand your stance at all. abeg  help me understand. Note dat i no dey talk of de financial crimes allegations, but de bad judgements wey de CEOs make.  I dey wait.

naijaking, you don start dis ya dribbling like Maradona again.  you dey try to minimize the size of de bad loans, right?  you don forget say, CBN recover almost N70billion within 2 weeks, yet de banks still no get enough capital. nobody dey talk about crime here.


why e hard you to admit say any bank CEO along with their directors of any bank, wey issue band loans to the tune of several trillion naira, should be held accountable? i no dey talk of criminal accountability o.  be honest enough to say these CEOs bear some responsibiliies here.  you fit disagree with sanusi methods, or de way way efcc handle de matter, but na only dishonest person no fit talk say these CEOs get culpability and share responsibility for the crisis. be man enough to admit that. i agree with you in a lot of the issues here, but try call a spade, a spade.

na de bolded statement wey i don dey try extract from you since. de wey you dey come across dey make people like me tink say you no want make anyone hold de CEOs accountable.  your disagreement na de method wey sanusi take handle de condition wey him see for de banking industry. Time will tell whether Sanusi style get wisdom.

I no get issue with you again. but i go dey watch you like hawk and go try help you balance your posts with moderation. 

yeah, the USA followed the law and what is the law of Nigeria on this kinda issue?

naijaking,  you still dey act like say you no understand wetting i dey talk since, ko? well i no believe you.  Hear you: When Sanusi began to act recklessly with people's money, concerned shareholders like me ought to take notice

de issue wey i get with you be say, you no take notice of de recklessness of the CEOs with de same enthusiasm wey you take dey criticise sanusi and cbn. thus, reasonable people go conclude say your reaction dey unbalance and was probably tribal based. i don tell you before, if you balance your write-up well well, you no go hear from people like me.  I stilll dey watch you.

Why is it so hard for you to understand? Before the global banking crises, Oceanic share was as high as #49.00, when the stocks fell all over the World it affected Nigeria too, Oceanic stocks came down to less than #6, but it began to slowly stablize(--mind you, I did say everything was perfect) like other banks. Then Sanusi struck, what is it today----technical suspension.

If he sells the bank to foreigners or to some other preferred group, that group, might even decided that my 20,000 shares would now be worth 200 shares, or that I would have no share at all. They could say this with CBN and Yar'dua government backing. And if you think that people would just walk away from bilions and billions of their own money, all in the name of Sanusi's craziness, then you better think again.

Also, think about how the above scenerio would discourage future investors in Nigeria. I speak as someone who's got money for the bank, not just as an ordinary Nigeria. And guess what, there millions of people all over Nigeria just like me.

Please stop talking about the banks falling, because nobody, not you or Sanusi has the interest of the banks at heart more than the shareholders, and board that built the bank up from nowhere. This talk about rescuing the banks to save them for the future is stupid, and I don't know why Sanusi and his apologists think any reasoning person would believe that.

When last I was in Nigeria in 1987, there was no Oceanic bank, that bank was literarily given birth to by Cecilia Ibru, she might not be an angel, but given other serious issues in the Nigerian environment, she deserves awards, not incaceration like a common criminal.