AN investigation by the Economic and Financial Crimes Commission (EFCC) into the alleged insider abuse in the banking sector earlier in the year, reportedly, indicted 22 managing directors, clearing only two of the 24 existing banks, the Nigerian Tribune has exclusively gathered.


Five bank chiefs were sacked by the Central Bank Governor, Lamido Sanusi, last Friday over alleged complicity in frauds detected in their banks.


Those sacked included Cecilia Ibru of Oceanic Bank, Erastus Akingbola of Intercontinental Bank, Barth Ebong of Union Bank, Okey Nwosu of FinBank and Sebastian Adigwe of Afribank.


Respite seems far from the sacked CEOs with indications that emerged on Sunday that they had been put under security surveillance by the EFCC, with a highly placed source within the commission revealing that they may be arrested in the course of the week.


The security surveillance reportedly woven around the sacked bank bosses, according to the Nigerian Tribune source, was to stop the embattled top bankers from travelling abroad.

According to the source, the apex bank would soon move against other indicted bank bosses using the EFCC’s report which was said to have been prepared as early as March, this year.


It was further learnt that the other indicted bank bosses would not be sacked and arrested until the sacked ones are arraigned in court, possibly this week.


Commission’s boss, Mrs. Farida Waziri had reportedly met with the indicted bank chiefs in March and let them into the discovery of their complicity in the alleged frauds, with a source revealing that “the exigencies of the time did not allow the commission to move against them, so that the commission would not be seen as destabilising the banking sector, considering that the global financial meltdown was just unfolding and the sector was seen as being critical to surviving the meltdown.”


The report, which President Umaru Yar’Adua has reportedly seen, is now said to have been dusted by the commission and the CBN and would be used in the coming weeks to deal with the bank bosses, according to our source.


Commission’s spokesperson, Mr. Femi Babafemi declined comments on the development.


Nigerian Tribune was told by a very competent source that the commission’s leadership was shocked after the final report of the investigation into the alleged insider’s abuse in the banking sector was produced by the investigators, but the bank chiefs were said to have lobbied the presidency to stave off any form of punishment from either the commission or the regulatory agencies in the sector.


The source, however, refused to reveal the identities of the other indicted bank chiefs, saying that “when we start picking them you would know them. Just wait till the coming weeks.”


There are indications that the Central Bank of Nigeria’s (CBN’s) hammer will fall on more bank managing directors as the CBN and the Nigeria Deposit Insurance Corporation (NDIC) continue their joint inspection of the remaining 12 banks in the country.


According to the Nigerian Tribune findings from the joint examiners, the preliminary investigations of the remaining banks where investigations are ongoing had shown that some of the banks’ bosses had burnt their fingers.


The Nigerian Tribune gathered that the sharp banking practices of the recently sacked bank managing directors were just the tip of the iceberg compared to other revelations that will be unearthed when the banks examination is completed in September, this year.


‘’Nigerians should wait till the completion of the whole exercise before passing comment on Friday’s incident as more bank managing directors will be relieved of their posts when the exercise is completed around September,” the source added.


Sanusi, exposing the sins of the sacked bank chiefs, said they incurred excessively high level of non-performing loans, lax credit administration processes and the absence or non-adherence to the bank’s credit risk management practices, bringing the percentage of non-performing loans to total loans ranging from 19 per cent to 48 per cent.


Sanusi continued: “It is evident that the five banks accounted for a disproportionate component of the total exposure to capital market and oil and gas, thus reflecting heavy concentration to high risk areas relative to other banks in the industry.” He also said the huge provisioning requirements had led to significant capital impairment.


Meanwhile, following the dismissal of the five bank managing directors, President Umaru Yar’Adua has mandated the country’s law enforcement agencies to recover bad loans in the five banks


According to Reuters,”The president has directed all law enforcement agencies to give their fullest support to efforts by the new management teams of the five banks , to recover the huge loans, the non-servicing of which placed the banks at risk of distress,” the presidency said in a statement.


The Central Bank said on Friday it was injecting 400 billion Naira into five banks and removing their senior management because their undercapitalisation posed a risk to the banking system.


Between them, the institutions account for 40 per cent of banking sector credit and the executives removed included members of Nigeria‘s corporate aristocracy, long seen as almost untouchable.


“President Yar’Adua fully endorses the measures announced by the Central Bank , to sanitise Nigeria‘s banking sector and prevent fresh bank failures with their attendant negative effects on the national economy,” the presidency said.


“President Yar’Adua wishes to assure all Nigerians that their deposits in Nigerian banks are safe as the Federal Government will continue to act in concert with the CBN to ensure that no bank is allowed to fail or become distressed.”


Sanusi said four of the five banks had been close to collapse and blamed their problems on poor corporate governance and lax administration.


The financial sector has become the key driver of Nigeria‘s economy and a systemic banking crisis would be disastrous.


Nigeria’s banks saw explosive balance sheet growth in the wake of consolidation four years ago, going on massive capital raising sprees which increased their capacity to lend to companies and individuals. Risk management did not keep pace.


The loans included credit to speculators on the stock market, down more than 60 per cent from its peak in March 2008.


They also included unsecured financing to fuel importers who have had to contend with a sharp fall in global oil prices from above $140 a barrel last year to half that level.


Further investigation by the Nigerian Tribune showed that just as the CBN governor had said that those who contributed to the banks’ misfortune would be brought to book, the Economic and Financial Crime Commission (EFCC) would soon swoop on dealing members in the capital market, whose present exposure to banks’ margin loans has been put at N1 trillion.


The dealing members (stockbrokers) who before now had been under pressure from the banks to pay up the loan facilities advanced to them, according to the CBN, would be made along with others who benefited from the unguided loans from the affected banks, to pay back at all costs.


Findings by the Nigerian Tribune also revealed that most operators in the market exposed to the margin loans are going to lose their operating licences.


The Securities and Exchange Commission (SEC) which under the Investment and Securities Act (ISA) has same power like the CBN to sanction any officer of any going concern listed on the stock market, has kept mute on the issue so far.


In his comments on the sacked bank chiefs, the Managing Director and Chief Executive Officer of Proshare, a leading financial analyst online media organisation, Mr. Olufemi Awoyemi, said a holistic approach in the repositioning of the financial services sector must be embarked upon if the CBN wanted to achieve the paradigm shift from the old order of doing things in the industry.


Awoyemi, who spoke at a training investors forum on Saturday, said the present governor of CBN was not doing a positioning but a clean-up in the financial industry and stressed that the apex bank ought to purge itself first.


According to him, the CBN’s department on banking supervision which vets the accounts of the banks whose chief executives were sacked must be sanctioned for misleading the entire nation.


“Banking supervision department of the CBN must be cleaned up, if they have allowed banks whose financials have been qualified to remain unchecked. Approving their accounts is fraudulent and it is a mockery of the whole process of governance in the country,” he added.


Awoyemi said that investors in the market should, as a matter of urgency, take class action against the auditors of the banks, for failing in their professional duties by a clean bill of health to the affected banks.


However, in spite of change in management, the new Managing Director of Oceanic Bank International Plc, Mr. John Aboh has assured customers of the bank of the safety of their deposits, saying the bank is safe and sound.


In a press conference held in his office at the weekend, the new bank chief assured that the depositors in Oceanic Bank do not have anything to fear as his primary purpose “is to ensure that Oceanic Bank is run in a safe and sound manner, so there is no need for panic.”


He said the bank remained strong as the Central Bank of Nigeria (CBN) has injected a fresh fund of N100 billion into it to shore up its liquidity level. The apex bank’s intervention, according to him, was meant to address a noticed liquidity gap.


“The new fund is to address the liquidity gap in the bank and also ensure that the bank meets all its financial obligations. The intervention is targeted at stabilising the bank by easing the existing liquidity constraints, embark on aggressive loan recovery and grow the business.”


With an assurance that the apex bank meant well for the financial institutions and the banking populace, Aboh said the new team in Oceanic Bank did not come in as an undertaker but to effectively grow the business.


Commenting on the proposed Annual General Meeting (AGM), scheduled for August 20, Aboh said the issue would be discussed at the Board meeting, to be held tomorrow.


While debunking claims that the entire board of the bank had been dissolved, he said new executive directors would be appointed by the apex bank to run the affairs of the bank anytime from now.


According to him, “the Board of the Bank is not dissolved, as all non-Executive Directors still remain in office. Therefore there is no need to panic.”


Oceanic Bank, for the first six months of operations in the current financial year, posted gross earnings of N92.8 billion, as against N66.5 billion realised in the corresponding period of 2008. The bank recorded 40 per cent growth in the earnings portfolio.


While the bank made N16.6 billion profit before tax, its profit after tax stood at N14.4 billion.


It will be recalled that the bank’s gross earnings for the year ended December 30, 2008, hit N188.22 billion, a 152 percent growth or N113.28 billion over N74.94 billion posted at the preceding full financial year. The bank’s assets base also recorded tremendous growth to N1.26 trillion from N1.01trillion of the preceding year.

http://www.tribune.com.ng/17082009/news/news1.html

It will be recalled that the bank’s gross earnings for the year ended December 30, 2008, hit N188.22 billion, a 152 percent growth or N113.28 billion over N74.94 billion posted at the preceding full financial year. The bank’s assets base also recorded tremendous growth to N1.26 trillion from N1.01trillion of the preceding year.

oceanic bank probably has some damn good external auditors who did some tremendous covering up of what is actually the real thing.With all their adverts on cnn, one will be thinking that these financial institutions are actually sound.

Perhaps Waziri is stirring into action.

i think soo