Desperation in banks
• Now send their staffers to debtors’ companies to collect daily returns
• EFCC begins auction of debtors’ assets next week
• CBN governor risk sanction, if…
By HENRY UMAHI, VINCENT UKPONG KALU, OLAITAN ABUDIORE and VIVIAN ONYEBUKWA
Saturday, August 29, 2009

With the Economic and Financial Crimes Commission breathing down their necks over non-performing loans, banks have started desperate moves to recover loans, including those which are not even due. Also, various banks have frozen the accounts of individuals and companies they lent money.

Saturday Sun gathered that ever since the Central Bank of Nigeria (CBN) sacked five bank managing directors as well as published the names of debtor companies and individuals, banks have set up a task force on loan recovery. This had become even more so since the EFCC is working on the theory that most of the loans were given to proxies of bank officials.

Sources revealed that in this loan recovery drive, many of the banks are using both orthodox and unorthodox methods. In the process, it was gathered that many of the bank customers have been embarrassed.
A source at First Bank revealed that since the CBN action, the banks have been calling people who borrowed money for various projects and putting pressure on them to pay back.

It was gathered that some of those contacted, in the last couple of days, are people who bought vehicles and property through loan facilities. In such loans, the borrowers transfer their salary accounts to the bank, from which monthly deductions are made, as soon as salary is paid. However, in their desperate moves, the banks seem to have forgotten the terms of agreement and are calling their clients and declaring the loans as non-performing. And these people have been embarrassed.

One of such clients, who pleaded for anonymity, told Saturday Sun that he got a call from the headquarters of one of the banks telling him that he had defaulted in payment and should act immediately.
According to him, “I told the lady that my salary account is domiciled in her bank and that I did this simply because of the car loan. I asked her if she had called my local branch, which facilitated the loan and find out the status of the loan and the repayment. She said she had not, demanding that I did that. I lost my cool, of course, and told her she did not know her job and that if she did, she would have called the local branch first before making such embarrassing call to me.”

When the bank’s client later contacted the branch manger, the woman was full of apologies, saying that the headquarters did not call them to find out the status of the loan. She confirmed that several of their customers had similarly complained about such calls from the headquarters of the bank. Saturday Sun gathered that other banks are equally doing the same thing.

Also to recover loans, banks now send their staffers to companies owing them, to physically collect daily returns.
It was gathered that officials of Zenith Bank now report at a fuel tank depot located in the Trinity area, on Oshodi-Apapa expressway, with armed policemen to ensure that payments are made into the account and that no cash is taken away.
Saturday Sun reporter gathered that the bank officials are now stationed at Zenon loading depot, at Ibru Jetty Apapa to recover their money. Payments are, therefore, made directly into Zenon bank account, domiciled in Zenith, by customers who come to buy products.

Sources said that a lot of customers, who made payments, could not, however, load their trucks for some days now. One of the customers, who paid N7 million, said she has not been able to load her truck for more than a week now. Effort to ascertain why Zenon stopped giving products to its customers at Ibru Jetty proved abortive. However, sources said that Zenith Bank seems to be in control of the products in order to recover its money.

Another customer, who pleaded anonymity, said the way things are, the bank now decides when products should be given to customers.
Sources at the bank said that they resorted to this tactics in order to forestall CBN hammer, especially since the apex bank is still auditing their bank. They also said that there was the need to recover whatever loan they could before the searchlight would be on the bank.

Meanwhile, banks are now freezing the accounts of companies they extended loan facility. Some of these companies, whose accounts are domiciled in the banks that gave them loan are finding it difficult to operate, in the face of non-access to their accounts.
Saturday Sun gathered that the new management in Oceanic Bank has stopped withdrawals from accounts of companies who have loan facilities. Such companies are not allowed to make withdrawals from the account, but deposits are accepted.

Sources said that the companies were not given prior notice of the action, which ensured that they were caught unawares. It was gathered that some of the companies were still making deposits into their accounts last week, not knowing that they would not make withdrawals.
One of the affected companies told Saturday Sun that such action would jeopardize the repayment of loan, as the operations of the companies are hampered. He said: “My affected account is the major one for the company. I cannot have access to money in the account to run my business. I don’t know how the bank expects me to service the loan when my business has been paralyzed. The goods I imported are at the wharf. I do not have money to clear them because I can’t make withdrawals.”

In a related development, the EFCC is intensifying its drive to recover non-performing loans owed banks. Sources revealed that the anti-graft agency has so far recovered more than N15 billion between when it gave a seven-day ultimatum and this week. The commission had given an ultimatum to bank debtors to pay up on or before last Tuesday or risk arrest and prosecution. Owing to the fact that some of the debtors made payments and were still making desperate efforts to make payments, the EFCC had stayed action on arresting them.

As at press time on Thursday, 68 loan defaulters were arrested by EFCC while a sum of N40 billion was recovered.It is expected that more arrests will be made by the anti-graft agency next week. Anybody arrested, it was revealed, would be made to surrender some assets or estate in lieu of the debt.

A source at the EFCC said: “Well, by next week it would be two weeks since the notice was given. That is enough time for those who want to pay in something to do so. By next week, we will go back to the original plan and that is to arrest these debtors and make them pay. Anybody we pick should be ready to give us the documents of his assets because our mandate is to recover the loan.”

The source revealed that such practice was not new in the EFCC, as all options that would lead to the recovery of money are used. He cited the case of Chief Emma Nwude, whose assets were confiscated and auctioned to recover the money he collected from people through false pretences.

While the EFCC is battling with loan defaulters and the arrested four bank chief executives, the CBN may be in the eye of the storm when the House of Representatives resumes plenary. Members of the House have revealed that the apex bank would be summoned to brief federal lawmakers on the action it took against the banks, especially on the source of N420 billion bailout given to Oceanic Bank Plc, Intercontinental Bank Plc, Union Bank of Nigeria, FinBank and Afribank, whose managing directors and executive directors were sacked two weeks ago.

Revealing this, the Chairman, House Committee on Appropriation, Hon. Ayo Adeseun, said that federal lawmakers had kept quiet on the development in the banking sector because of the recess. He revealed that as soon as the lawmakers resume sitting, the CBN Governor, Mallam Lamido Sanusi, would appear before the House to explain where he got money to bail out the banks.

Adeseun told The Sun editors that the lawmakers could not have stopped Sanusi abruptly. Doing so, according to him, could have amounted to causing more damages than the one he was trying to correct.
He gave assurance that the CBN governor still has some questions to answer later on the matter.
His words: “You would know that this episode occurred while the House was on break.

There was no way we could come back to start to address the issue. The other problem we have with the development is the fact that, given the sensitivity of the banking sector to the economy, if the process was underway and we got wind of it and we stopped it, the impact of that might have been even worse to the economy.

“But now that the deed has been done, we now have a responsibility, through the oversight function, to ask Sanusi to come forward and tell us what he did. Where did the CBN get N420 billion it gave out to whosoever it so pleases? Who appropriated the money?

“Those are the kind of things we will look at. If any one is found to have flouted the laws, he or she will be punished appropriately. We also hope this will also serve as a way of discouraging some activities in the future and serve as deterrent to others.
“Given what happened, and the speed with which it was done, without consultation, there was not much the parliament could do, except react afterwards.”

http://www.sunnewsonline.com/webpages/news/national/2009/aug/29/national-29-08-2009-01.htm

i think the CBN is is doing job on these banks, however, the banks in turn shd not use this as a way to embarass people that are yet to default, how would they expect biz to run, if they are freezing account of loans that are performing, how wld these people pay, if they cant run biz?
I agree with seizing assets and auctioning them off.
But they need to do all with brain.

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