CBN Considers Intervention In 5 More Banks

''Nigeria: CBN Considers Intervention in Five More Banks

Ayodele Aminu     

Lagos — An additional N200 billion may soon be injected into the banking sector by the Central Bank of Nigeria (CBN), which is also set to intervene in five more banks in a bid to safeguard the sector from systemic collapse.

This indication emerged hours after the board of BankPHB failed to reach a consensus on the removal of its Managing Director, Francis Atuche, who has recently been under tremendous pressure to quit following the outcome of the last audit report.


Barring any last minute changes, the five more banks that may be affected in CBN's latest intervention are Spring Bank Plc, BankPHB Plc, Equitorial Trust Bank, Wema Bank Plc and Unity Bank Plc.

THISDAY gathered that CBN Governor Sanusi Lamido Sanusi intimated President Umaru Musa Yar'Adua and members of the Economic team about his findings and how to much would be required for the intervention immediately after yesterday's Federal Executive Council (FEC) meeting.

The proposed CBN intervention and capital injection in the five fresh banks is coming precisely a month and a half after the banking watchdog injected N420 billion lifeline into FinBank Plc, Union Bank of Nigeria Plc, Afribank Nigeria Plc, Oceanic International Bank Plc and Intercontinental Bank Plc and sacked their chief executives, saying lax management had left them dangerously undercapitalised.

These institutions have since been taken over by CBN appointed managements, which have since been running the banks as going concerns until new investors are found to recapitalise them.

The managements of the first five banks were removed following the outcome of the first round of the audit concluded by CBN early last August - covering 10 banks of which five comprising First Bank of Nigeria Plc, United Bank for Africa Plc, GTBank Plc, Diamond Bank Plc and Sterling Bank Plc were certified fit.

Banks included in the second batch of the audit, which have been concluded are Skye Bank, Bank PHB, Ecobank Nigeria Plc, Spring Bank Plc, Access Bank Plc, Wema Bank Plc, Unity Bank Plc and Equitorial Trust Bank.

Three others - Standard Chartered, StanbicIBTC and Citibank - are in the third batch of the audit that has also been completed. The results of the audit are expected to be officially announced by CBN in the next two weeks.

The general parameters upon which the examination of the banks' records was based included capital adequacy, liquidity, solvency and corporate governance.


THISDAY gathered that based on the advice of the CBN solicitors, due process was followed during the recent audit process as the respective chief executive officers of the affected banks were allowed to go through reports arising from the audit and make adequate responses to them.

CBN may have decided to change gear in handling the situation in the affected fresh five banks.

Unlike the method it adopted on August 14 when it specifically removed the CEOs and executive directors of the five banks affected in the first batch of the audit, the apex bank may have decided to let the board of directors of the five banks found wanting in the latest audit to implement the tough decisions necessary to put the banks in order.

The newspaper had reported two weeks ago that four of the affected five banks' boards had been mandated to carry out certain measures to be dictated by CBN in accordance with the Banks and Other Financial Institutions Act (BOFIA) and CBN Act.


But efforts of the board of Bank PHB to persuade Atuche to voluntarily resign over the audit report of the bank proved abortive yesterday at a meeting exclusively for the non-executive directors in Lagos. The directors are said to have briefed CBN about this development.

With Atuche's refusal to step down, he seems to have jeopardised the opportunity of BankPHB to appoint its own Managing Director to work with CBN.

The apex bank may have to appoint someone to take charge of the bank.

It was gathered that BankPHB has three major issues. One is the N65 billion, which it used to acquire Spring Bank, the second is the N50 billion forbearance the bank sought for Spring Bank, while the third is the N23 billion loss alleged to have been incurred during the tenure of the CBN Interim Management Board of Spring Bank led by Sulleyman Ndanusa.

During the tenure of the immediate past CBN Governor Chukwuma Soludo, BankPHB had tried to secure a N50 billion forbearance, which was presented at the last board meeting that Soludo attended. The request was said to have been turned down.

When the incumbent CBN governor came in, the same request was also presented to the apex bank's board and it was also rejected.

The thinking of the board was that if at all any forbearance was to be given, it should have been for everyone who wanted to buy Spring Bank and not specifically for BankPHB.

THISDAY gathered that officials of BankPHB are currently in talks with CBN to persuade it to remove the N23 billion losses incurred during Ndanusa's tenure from its books on the excuse that they were not in the know when they acquired Spring Bank.''

But the CBN was said to have declined, insisting that BankPHB ought to have done its due diligence before acquiring Spring Bank.

I observed that the Thisday newspaper report omitted Zenith Bank. Can anyone explain why or has any info on the bank in the scenario? thanks

the is totally unfair. why is CBN now giving other affected banks the oppurtunity to defend themselves and an option of resignation for their MD's. me think sanusi did not think well enuff b4 carrrying out the 1st exercise, rather he used them as guinea pigs to c how people would react or the effect it would on the economy.
i believe in form ,but not the one that is unjust because sooner or later it will back fire