Contrary to the Central Bank of Nigeria position on the strength and status of the Nigerian banking industry, the Nigerian Accounting Standards Board (NASB) has hinted that all may not be well with the nation’s financial sector.

It has therefore warned that the Nigerian banking community should not be carried away by the spurious claims of some banks about their state of health, an indication that the worst is not over yet for the industry.

The Technical Director of the NASB, Mr Jim Obazee, who dropped the shocking news at Akodo, Lagos at the weekend, faulted claims by the CBN Governor, Professor Chukwuma Soludo, as well as the management of some of the nation’s 24 banks about their financial stability and overall global rating.

Mr Obazee, who spoke at the 2008 Finance Editors/Correspondents Retreat, disclosed that contrary to several unverified claims by banks in the country, only about seven banks in the country could pass the critical international tests for healthy operation.

According to him, only two of the 24 banks qualified as market makers, which meant that they had the financial capacity to intervene in the capital market in case of crisis.
The NASB boss who is also the moderator of the International Accounting of the American Accounting Association (AAA) as well as the United Nations Committee for Trade and Development Consultative Group on Small and Medium Enterprises, stressed that only seven Nigerian banks were healthy, including the two, which qualified as market makers, while four of them were in transition to becoming healthy. In addition, he adjudged 11 other banks as merely existing, neither healthy nor sick.
He also declared two of the nation’s banks sick, saying they might survive only on life support from the regulators.

Obazee, whose organization is the statutory body that issues accounting standards for the nation’s private sector, noted that as a result of their current position, a number of the banks were dabbling into non-core banking activities, warning, however, that they should be ready to face the consequences of their action in the near future.

He declared the situation in the industry had fueled further distrust among the operators as only a few could cooperate in the market place.
The NASB position may have contradicted that of the CBN Governor, who last Monday, while addressing the National Assembly, reassured that the nation’s financial sector was in perfect state, stressing, however, that the bank would not hesitate to provide bailout if the need arose.

The government had as part of a concerted action to salvage the ailing capital market, floated the idea of creating market makers out of the existing banks to buy up the toxic asset in the market and to provide stability too.
By definition market makers are those institutions with the capacity to change the direction of the market through regular liquidity intervention.


http://www.sunnewsonline.com/webpages/news/national/2008/oct/27/national-27-10-2008-001.htm

NDIC says only 4 banks are safe and sound. CBN says all banks are sound !! Food for thought

NASB has denounced the publication!!!
CBN says its all hoax!!!

guys beware of what u read
can u imagine? when the world economy is suffering from economic meltdown, arent we supposed to be scared if anything goes wrong with our own financial system?
those NASB dudes should watch it!!

tkb417:

NASB has denounced the publication!!!
CBN says its all hoax!!!

guys beware of what u read
can u imagine? when the world economy is suffering from economic meltdown, arent we supposed to be scared if anything goes wrong with our own financial system?
those NASB dudes should watch it!!

yea we are supposed to be cautious but at the same time we deserve the truth
there's obviously no smoke without fire and the banks can only help by being open
and following international best practises offering banking services instead of chasing
watery titles like biggest,best,first to do this whilst thousand can even get their money out
with atms up and down the country

what's the big deal in have a uniform year end?

ahhh

What kind of quack journalism is this? Do Nigerian newspapers' editors still do their jobs properly? In reporting this news, this journalist has grossly failed to identified the heatlhy and unhealthy banks. If these were not declared by the source(s), the journalist is duty bound to aptly let his/her audience know that this crucial infomation had been witheld by his/her source(s). Given that I've read similar reports on several occasions, it's high time Nigerian journalists who report in this manner woke up to, and faced, the reality of excellent journalism. Otherwise, they should quit and find something else to do.

Why are we crying over split milk. The banks got greedy and threw caution to wind. Now they are paying the price for their own greed. My only concern goes to the average investor out there that borrowed money to invest and not the banks.

NASB report has become an annual ritual always followed by CBN refuttal even in the days of Charles Soludo. We need to know the healthy banks pronto