How Sanusi Allegedly Set Banks Mds Up

How Sanusi Allegedly Set Banks MDs Up

By Onyedika Agbedo (Guardian online news sat 10/10/09)

http://www.ngrguardiannews.com/news/article03//indexn2_html?pdate=101009&ptitle=How%20Sanusi%20Allegedly%20Set%20Banks%20MDs%20Up


AGAINST the backdrop of the recent sacking of three more bank MDs, by the Central Bank of Nigeria (CBN), bringing the number of banks whose managing and executive directors have been sacked to eight, analysts have continued to look at the critical reasons behind the controversial 'reforms' by the apex bank.
Industry sources alleged that most of the banks affected by the reforms were wittingly or unwittingly set up for the circumstances that eventually led to the sack of their directors.
For instance, it is being alleged that the CBN's deliberate and sudden switch from Expanded Discount Window (EDW) to Inter-bank market signalled the beginning of erosion of liquidity and stability in the banking sector.
Sources alleged that through a text message on June 16, this year, the CBN Governor, Mallam Sanusi Lamido Sanusi had directed nine banks managing directors to proceed to Inter-bank henceforth "in view of the closure of EDW."
According to the source, banks going to EDW did not mean they had problems. "It was a trading window popularly called arbitraging in money market. It is not a liquidity window. At EDW, banks borrow at 10 per cent interest and lend at between 14 per cent and above," claimed the source.
The Guardian also gathered that 23 of the 24 banks were at the EDW with Standard Chartered Bank being the only exception and that out of the 23 banks, 11 were regular at the EDW.
At the time of CBN's first intervention, FinBank, for instance, The Guardian learnt, had taken N50 billion which it placed in other banks. It had Inter-bank placements with other banks totalling N45 billion. This was the same setting for Union and Intercontinental Banks.
"When Sanusi shut EDW without notice, the banks were predictably caught in-between and naturally requested enough time to enable them to recover the money they had already lent out to other banks. The CBN refused on the grounds that the window was inappropriate.
"Sanusi instead directed them to go to 'Inter-bank' and went ahead to introduce 'Guaranteed Inter-bank'. The banks were now forced to patronise this in compliance with his text message of June 16."
The source said: " If Sanusi had given the banks the shortest loan tenures of 90 days notice (but did not because he had already made up his mind to undermine them) these monies lent out would have come back. The contradictions in the debtors' list showed that the money was back between June, July and August whereas CBN cut off date was May 31, this year. This was the major reason why CBN's debtors list was so controversial."

 



I profoundly weep for nigerians, nigeria ecenomy and nigeria as a nation