Many Nigerian banks that have been carrying over their debt portfolio may be forced to write-down such bad loans, world leading risk analysts and consultants, has stated. 
The group’s position follows the confirmation of Sanusi Lamido Sanusi as the new CBN governor.

A document prepared by Sebastian Spio-Garbrah, analyst, Middle East and Africa, on behalf of the group and made available to BusinessDay, said policy-wise the most substantive difference between Soludo and Sanusi may be with regard to the mark-down of bad assets held by Nigerian banks.

“Soludo gave banks until the end of 2009 to declare the true extent of their bad loans and affiliated losses on the country’s capital markets. In fact, this policy largely explains the banking industry’s enthusiastic support for Soludo’s reappointment”, the group stated. 

According to the group, “many banks facing liquidity pressures do not want to be forced into a thorough write-down of their bad loans and investments, which at an aggregate level are estimated at between $6 and $10 billion, or roughly half of their present capital base.”

However, Eurasia stated that “Soludo’s forbearance with regard to the systemic weakness of the banks likely exacerbated the liquidity crisis that battered the country’s financial system until recently.”

It noted that Sanusi led First Bank to comply with Basel II and International Financial Reporting Standards (IFRS), and may likely push for adoption of more stringent risk management and compliance protocols across Nigeria’s financial industry.

According to the group, if the banks are forced into recognising their losses, the current crop of 24 banks will shrink even further as some middle-tier ones who are most stressed will seek to combine in order to survive.

A new wave of bank mergers and acquisition (M&A) could result from a move by a Sanusi-led CBN to force the banks to write-down their losses, the group noted.

On monetary policy, it stated that “Sanusi will very likely follow the orthodox macroeconomic advice of CBN’s economic staff, producing more reliable policies. While he has an independent streak, Sanusi, unlike Soludo is not a professional academic economist and is more likely to avoid ‘going it alone’ or veering far from the mainstream of consensus orthodox macroeconomic policies”. 

Although inflation has been at relatively low levels, the recent 30 percent fall in the value of the Naira and rebound in commodity prices could put upward pressure on prices again, according to the body.

It states that Sanusi may have to fight inflation early in his tenure.

In addition, “Sanusi’s training in Islamic Sharia law will also likely make him more open to Islamic banking practices, which have not yet taken hold in Nigeria, despite its large Muslim population. A move to establish Islamic banks in the northern states will harm the retail growth strategy of many southern based banks who are now feverishly venturing into the un-banked north”, it noted. 

[b]According to Eurasia, Sanusi’s appointment will help consolidate northern Muslim elite influence over the Nigerian economy and financial sector. [/b]His selection also completes Yar’Adua’s break with the personnel of former President Olusegun Obasanjo. It will also likely end a period of recent seemingly erratic central bank policy decisions, the group noted. 

By replacing Soludo with Sanusi, Yar’Adua also completes his break with the Obasanjo’s economic team. Before coming to the CBN, Soludo had been Obasanjo’s chief economic adviser and the principal architect of Nigeria’s banking sector consolidation. Yar’Adua has already dismissed other high profile members of the Obasanjo economic reform team, such as Nasir El Rufai and Nuhu Ribadu, the group noted.

Yar’Adua is also signaling a break with the seemingly erratic and contradictory policy moves made recently by the CBN under Soludo, policies with which Yar’Adua had grown frustrated.

“These have included foreswearing and then re-imposing interest rate controls; imposing forex controls that exacerbated the fall of the currency and fueled the growth of the unofficial Naira market; and promulgating rules on minutiae such as bank advertisements, the physical location of ATMs, and the titles that local banks should confer on employees”, the group noted.

It stated that Sanusi will likely reverse a number of the decisions made by Soludo.

http://www.businessdayonline.com/index.php?option=com_content&view=article&id=3060:new-cbn-governor-may-force-early-write-down-of-bad-loans&catid=54:banking-finance&Itemid=326

Nigeria Banks are in trouble, lol, anyways this is good for the economy, public and shareholders. Transparency  is very important to avoid a bubble.
I also think the islamic banking is a good idea, he should also add private banking (if its not already available in Nigeria banks.)

Nigeria Banks are in trouble, lol, anyways this is good for the economy, public and shareholders. Transparency is very important to avoid a bubble.
I also think the islamic banking is a good idea, he should also add private banking (if its not already available in Nigeria banks

.)


I am ignorant here.What is islamic banking?

asha 80:

.)


I am ignorant here.What is islamic banking?

http://en.wikipedia.org/wiki/Islamic_banking

It is becoming very popular in the west, because it minimizes your exposure to debt (especially since they are performing better in this downturn). more and more western banks are offering it in addition to traditional banking. Just like a bank will have personal banking(checking account and savings) , investment banking, private banking, they are now offering Islamic banking.

http://www.hsbcamanah.com/1/2/hsbc-amanah/- HSBC's website for Islamic Banking

http://www.alislami.ae/en/index.htm- Dubai Islamic Bank- this type of banks only offer Islamic banking.

nonsense

is howalla not part of islamic banking

used by terrorists to launder untrackable money

introduce that in Nigeria, Governors will start paying their monthly allocation to banks in Yemen, Urman and all of UAE and middle east

Why Soludo was dropped –Northern Group
From MURPHY GANAGANA, Abuja
Friday, June 5, 2009
Soludo
•Photo: Sun News Publishing

   * More Stories on This Section

The Northern Patriotic Front (NPF) yesterday disclosed the underlying factor which militated against the re-appointment of the immediate past Governor of the Central Bank of Nigeria (CBN), Professor Charles Chukwuma Soludo for a second term, despite his widely applauded reforms in the banking sector.

NPF National Chairman, Alhaji Ali Abacha, told Daily Sun in an exclusive interview in Abuja, that pressure was indeed, mounted on President Umaru Yar’Adua by formidable northern groups and power brokers in ensuring that Soludo was not given a second term of office. Their grievance was based on the belief by a cross section of northerners that most of his financial policies, especially relating to foreign exchange, were not favourable to the north.

According to Abacha, “Soludo introduced some policies that were too harsh for the North. So, when his tenure expired, we said there was no need for extension, that they should get somebody from the North who is competent. And because most of our people are not educated as they are basically farmers, we wanted somebody who would give priority attention to agriculture.”

While admitting that the erstwhile CBN boss exhibited competence in the discharge of his duties, the NPF however, insisted that most of his policies further pauperized the northern masses.
Said Abacha: “If you take the foreign exchange which has a large number of northerners involved in the business, he introduced a lot of stringent conditions and most of our people in the trade are not educated. They faced a tough times during his five year tenure. The policies are only good for advanced countries, not in Nigeria where education is still low and poverty still high, especially in the North”.

Reacting to allegations that President Yar’Adua play the ethnic card particularly with the appointment of core members of his economic team the Minister of Finance, Presidential Economic Adviser, Minister for National Planning, and the Governor of CBN, among others, the NPF said the appointments were made by President Yar’Adua in his quest for credible people to move the nation forward, adding that “there is nothing wrong in Yar’Adua appointing northerners in key positions”.

The NPF chairman spoke further on various appointments made so far by President Yar’Adua, against the backdrop of the group’s position at a recent meeting in Abuja . His words: “The Northern Patriotic Front rose from its last weekly meeting in Abuja where it X-rayed the actions of the President on various appointments made within the period as well as other national issues. The NPF commends the President for the confirmation of the appointment of Dr. Bernard Shaw Nwadialo as the Comptroller General of Customs. The meeting commended the President for his decisions and debunked the insinuation by some unpatriotic persons accusing him of being sectional in his appointments.

The NPF urges the President to continue in his efforts towards taking Nigeria to greater height, and hopes that by the appointment, the Comptroller General of Customs will use the opportunity to turn around the Nigeria Customs Service for the attainment of Vision 20-2020”
Abacha, who however, conceded that President Yar’Adua’s seven-point agenda is too bogus for effective implementation urged him to reduce his programmes to a manageable level. “If he had concentrated only on agriculture and power, we would have achieved a lot in the past two years of his administration,” he noted.

moneygurl:

http://en.wikipedia.org/wiki/Islamic_banking

It is becoming very popular in the west, because it minimizes your exposure to debt (especially since they are performing better in this downturn). more and more western banks are offering it in addition to traditional banking. Just like a bank will have personal banking(checking account and savings) , investment banking, private banking, they are now offering Islamic banking.

http://www.hsbcamanah.com/1/2/hsbc-amanah/- HSBC's website for Islamic Banking

http://www.alislami.ae/en/index.htm- Dubai Islamic Bank- this type of banks only offer Islamic banking.

this must be sisi @ work

What is sisi @ work?