https://www.youtube.com/watch?v=-4MtUELti0I

comment freely

Thanks. What do you think about the interview?

i think he's well spoken and knows his stuff, he's knowledgable about banking and you can clearly see that his expertise is in risk management. on the substance of the interview though i think his attempt to shore up confidence in nigerian banks is somewhat contradictory. you can go abroad and say our banks are solid and safe and at the same time say that some major banks are nearing collapse due to poor risk management and non performing loans. so its a mixed signal that he's sending and i dont know how effective his trip will be as far as confidence building is concerened. I wish his agenda luck though. I think what should have been done is, for him to draw up an series of new policies that would remedy the non performing loan problems instead of sacking bank CEO's left and right. he should have found a way to set new policies that prevent poor credit practices in the future and penalties for those that dont conform to the new policies. things should've been a little more underground and hidden from the media so his actions wouldnt negatively affect the image of the nigerian banking industry.

I watched the whole interview and I liken his approach to that of a fighter who has just knocked out his opponent with fifty unanswered punches and then says "I hope my opponent is okay". He said he’s aim is to clean up the Nigerian banking system, but to clean up what? Is it to prevent banks from taking unnecessary risks? To stop the provision of fraudulent loans? He’s whole affair is quite ambiguous in that he wants to create a more robust Nigerian banking system but at the same time he has brought about mass panic.

The effect of his actions is that his task will become much more difficult now because:
- He has destroyed confidence in the banking sector - domestically and internationally
- He wants to promote a robust banking system he has just labelled as reckless and fired 5 CEOs

It was funny how he complained about how Nigeria's credit rating had been down graded as if it was unfair - after he had caused all the chaos himself. The truth is he should have advised the CEOs discreetly (without any media circus) that they should curb their risks and recover their loans ASAP - this would not have destroyed confidence in the banking sector. Then he could have embarked on an international tour to promote and strengthen the image of Nigerian banking which has been built up over a decade. Nigerian banks would have been seen as the African miracle we have all been waiting for but, you know the rest.

Some say that he’s intervention was timely because the banks were on the brink of collapse; but the fact is those with financial knowledge know that banks are a necessary evil. Banks are the lifeblood of the economy - they are a special type of business that must be well managed and regulated and if they fail? They must be nationalized or taken over. Bank execs will always be greedy because their shareholders demand that – Profit maximization; so we must get rid of this fantasy that Nigerian bankers should not be greedy, Bankers will always be greedy! That is capitalism, if the banks fail the government must cleanup and create the environment for the banks to rebuild. For example in the UK a Bank called Northern Rock had debts of around $180 Billion! Right under the nose of the FSA (Regulator) The CEOs were called reckless and they resigned on a nice pension and the bank was nationalized. The CEOs were not arrested like in Nigeria, they even got paid their Bonuses! But in Nigeria the government pumps in a paltry $2.6 Billion and sends the EFCC after all the executives, doors being busted, CEOs fleeing for their life – what a mess!

But to be fair to Lamido, he seems to have good intentions and a noble cause but its seems as if he’s over exuberance has caused immense short-term damage.
My feeling is that his 'Rambo style', cleanup will make the Nigerian banking sector weak and vulnerable to controversial takeovers, can anybody see any good coming out of his actions?

nolongTing:

I watched the whole interview and I liken his approach to that of a fighter who has just knocked out his opponent with fifty unanswered punches and then says "I hope my opponent is okay".  He said he’s aim is to clean up the Nigerian banking system, but to clean up what?

To clean up bank executives that reduce banking to a ponzi scheme by doctoring their records to hide the fact that the bank is failing

Is it to prevent banks from taking unnecessary risks?

No. Banks are allowed to take risks as long as the risk exposure of your portfolio remains within the set regulatory limits. A banking license allows you to do business with depositors funds on the assurance of the CBN and the NDIC. It should not be abused. Example, you cannot invest the entire depositors funds in the stock market.

To stop the provision of fraudulent loans?

No. You are free to grant fraudulent loans, but be ready to face the consequences if caught.

He’s whole affair is quite ambiguous in that he wants to create a more robust Nigerian banking system but at the same time he has brought about mass panic.

What has brought panic is people like you misrepresenting the truth and trying to justify your position by advertising a non-existent panic

The effect of his actions is that his task will become much more difficult now because:
- He has destroyed confidence in the banking sector - domestically and internationally

Evidence?
Have you (or anyone you know) gone to the banks to withdraw and be declined because  of liquidity problems arising from mass withdrawal? cos that is what should happen if the confidence has been destroyed

- He wants to promote a robust banking system he has just labelled as reckless and fired 5 CEOs

The sacked executives were reckless in mismanaging depositors funds. Getting rid of such, along with transparency and accountability, is what promotes robustness.

It was funny how he complained about how Nigeria's credit rating had been down graded as if it was unfair - after he had caused all the chaos himself.

The S&P ratings was not downgraded because the CBN sacked the executives, but instead it was based on a misinterpretation of the injected funds into the bank

Standard & Poor's cut its sovereign credit ratings on Nigeria deeper into junk territory, after the government bailed out five large banks and saw a fall-off in oil revenue.
Nigeria's foreign currency rating was cut by one notch to B+, while the local currency rating got a two-level cut, also to B+.
The ratings firm, which maintained its stable outlook, said Nigeria has become less fiscally flexible after its central bank planned a $2.6 billion capital injection into five domestic banks, which, combined, make up 40% of the country's loans.
"In our opinion, the central bank's action has begun a welcome restructuring of Nigeria's banking system, but it also reveals deep problems in Nigeria's credit markets," S&P said.
Nigeria's banks were left overexposed to commodities when oil price spikes set off a flurry of borrowing and investing, and banks lent heavily to a booming stock market. The ensuing fall in commodity prices and global economic downturn left its markets reeling. Its stock market has fallen around 60% from its highs early last year.
S&P said that the government would increase its borrowing requirement as a result of the bank takeover, and forecast a 2009 deficit of 4.5% of GDP.
"On the other hand, our central forecast is that the current problems in Nigeria's financial markets will not lead to a balance-of-payment crisis," the credit rater added.

The error is that The CBN has not bought into the banks, which is what would have happened if the funds were injected into the tier 1 capital. Instead they have been injected into the tier 2, essentially acting as an insurance policy.

The S&P change has been criticized in several quarters (home and abroad). For comparison, the Fitch ratings remained unchanged.

The truth is he should have advised the CEOs discreetly (without any media circus) that they should curb their risks and recover their loans ASAP - this would not have destroyed confidence in the banking sector.   

The bank CEOs were not fired for taking risks. They were fired because they took risks, lost out (evidenced by the huge portfolio of non-performing loans) and fraudulently manipulated the figures in their books to hide the truth.
Should such fraudsters be left in office? or should they have been given time to call on their political friends to protect them?

Then he could have embarked on an international tour to promote and strengthen the image of Nigerian banking which has been built up over a decade.  Nigerian banks would have been seen as the African miracle we have all been waiting for but, you know the rest.

To go about image laundering without addressing the core problem is folly in the least, or is that not what Dora is guilty of in trying to rebrand Nigeria? or do you think investors are that stupid?

Some say that he’s intervention was timely because the banks were on the brink of collapse; but the fact is those with financial knowledge know that banks are a necessary evil.  Banks are the lifeblood of the economy - they are a special type of business that must be well managed and regulated and if they fail? They must be nationalized or taken over. 

The banking sector, is different from 5 banks. Leaving those 5 banks to continue borrowing from other banks without repayment (like that have been doing from October 2008 to the tune of N200Bn in 8 months) would have resulted in a collapse of the entire sector. The government taking over banks should always be a last resort, as it is often essentially using public funds to cover up the the greed of a  few,and even in that case, the greedy few should be investigated and brought to book.

Bank execs will always be greedy because their shareholders demand that – Profit maximization; so we must get rid of this fantasy that Nigerian bankers should not be greedy, Bankers will always be greedy! That is capitalism, if the banks fail the government must cleanup and create the environment for the banks to rebuild.  For example in the UK a Bank called Northern Rock had debts of around $180 Billion! Right under the nose of the FSA (Regulator) The CEOs were called reckless and they resigned on a nice pension and the bank was nationalized.  The CEOs were not arrested like in Nigeria, they even got paid their Bonuses! But in Nigeria the government pumps in a paltry $2.6 Billion and sends the EFCC after all the executives, doors being busted, CEOs fleeing for their life – what a mess!

So you think everything that is done in a foreign country is right?
What happened in the UK was wrong. The FSA failed in its duties (and admitted as much) and let the situation degenerate beyond recovery. The nationalization occurred after failed bids to have private investors agree to takeover the bank and return public funds within a set limit of 3 yrs. The bank has fortunately recovered at the expense of the shareholders who lost most of their money. The bank would likely be sold at the end of this year.

As to the Northern Rock executives not being prosecuted, it was because they were not doctoring their books! If they were, they would also have been charged like the Enron executives or Madoff. Northern rocks problems stemmed from the credit crisis which caused a liquidity problem for them. Their assets outweighed their liabilities. They were not mismanaged into insolvency, like the 5 banks in questions whose liabilities have eroded most of the share holders funds giving them a  capital adequacy ratio, CAR = capital/risk of less than the regulatory required 10% with one bank being as low as 1.01%.

So please do not sweepingly compare mango to coconut even though they are both drupes.

But to be fair to Lamido, he seems to have good intentions and a noble cause but its seems as if he’s over exuberance has caused immense short-term damage. 
My feeling is that his 'Rambo style', cleanup will make the Nigerian banking sector weak and vulnerable to controversial takeovers, can anybody see any good coming out of his actions?

There is no rambo style about it. The guy basically took the bold moves that are required to clean up the sector. This is what should have been done before the consolidation exercise, when the banks would have been smaller and the effect of the failing of one bank less critical. This is the best supervisory move in the banking sector in the last 2 decades.

Like I said earlier, you think you know what you don't know

@binna I have already exposed your twisted logic:  https://www.nairaland.com/nigeria/topic-315179.256.html
But why not take you apart again:

biina:

So you think everything that is done in a foreign country is right?

No, you do.

biina:

What happened in the UK was wrong. The FSA failed in its duties (and admitted as much) and let the situation degenerate beyond recovery wadi yadi dah!

Stop regurgitating what I have already written in a consise manner.

biina:


[size=14pt] Northern Rock was not mismanaged into insolvency[/size]

Then why did Northern Rock need a £91 Billion bailout?  You love to humiliate yourself, this is a shocking lack of BASIC knowledge!!!!

Then you went on to write:--

biina:

like the 5 banks in questions whose liabilities have eroded most of the share holders funds giving them a  capital adequacy ratio, CAR = capital/risk of less than the regulatory required 10% with one bank being as low as 1.01%.

I will use one of your silly responses to respond:

biina:

Typical aggrandizement of self importance like a toddler. 
Of what relevance is this to the discussion at hand, or can we deduce that you are simply trying to add the lacking credibility to your posts.
Who cares if you were a professor at the havard business school

biina:

So please do not sweepingly compare mango to coconut even though they are both drupes.

The kind of colloquial terms I expect from a tomato and pepper market trader.

And what else have you got to say?

biina:

There is no rambo style about it. The guy basically took the bold moves that are required to clean up the sector. This is what should have been done before the consolidation exercise, when the banks would have been smaller and the effect of the failing of one bank less critical. This is the best supervisory move in the banking sector in the last 2 decades.

Like I said earlier, you think you know what you don't know

You seem incredibly desperate to defend your god Lamido Sanusi, hilarious! You are entitled to your own muddled opinion.

biina:

Like I said earlier, you think you know what you don't know

Prove it! And back it up with evidence. 

I have not watched the interview BUT the consequences of his action does not portray him as a good governor material of a central bank. His i more like a FIRE BRIGADE on training who put fire in a house to put it off later.

He has inject panic into the banks, and the risk, drama, innuendos, military style, I got the power. The only job of a central bank Governor is for him/her to be idnetified with good news/ confidence projection. Sacking, EFCC etc is the tool of the Actor, it lasst for few days but the consequnences last years.

He may be able to speak grammer more than the Queen of England, and knows banking and risk more than Adam smith. He is nonetheless a fool who has no wisdom. He is only interested in Sanusi lamido and fame but not Nigeria's or the banking/financial business interest.

Once you create PANIC in the market, all your other activities are negated.period

CBN is more to blame for the problem than the bank because their regulatory and examination of the bank's has failed for sometime, so they are guilty as those banks.

Infact I will suggest that they shuold have suspend those CEO's when they found out some months ago that lending practices will endangerthe whole banking industry. CBN was aware of those 'risky lending' many months ago. So, that brought out next the powers of CBN governor who is unelecetd and hardly accountable to anyone except the President. The power should be curtailed , and let independent bodies regulate the banks while CBN sticks with setting interest rates.

Also, by the way the money CBN injects to those banks are that of the country/Taxpayers, and LAMIDO sanusi should stop talking as if the monies belongs to him or CBN in isolation.

vigasimple:

I have not watched the interview BUT the consequences of his action does not portray him as a good governor material of a central bank. His i more like  a FIRE BRIGADE on training who put fire in a house to put it off later.

He has inject panic into the banks, and the risk, drama, innuendos, military style, I got the power. The only job of a central bank Governor is for him/her to be idnetified with good news/ confidence projection. Sacking, EFCC etc is the tool of the Actor, it lasst for few days but the consequnences last years.

He may be able to speak grammer more than the Queen of England, and knows banking and risk more than Adam smith. He is nonetheless a fool who has no wisdom. He is only interested in Sanusi lamido and fame but not Nigeria's or the banking/financial business interest.

Once you create PANIC in the market, all your other activities are negated.period

CBN is more to blame for the problem than the bank because their regulatory and examination of the bank's has failed for sometime, so they are guilty as those banks.

Infact I will suggest that they shuold have suspend those CEO's when they found out some months ago that lending practices will endangerthe whole banking industry. CBN was aware of those 'risky lending' many months ago. So, that brought out next the powers of CBN governor who is unelecetd and hardly accountable to anyone except the President. The power should be curtailed , and let independent bodies regulate the banks while CBN sticks with setting interest rates.

Also, by the way the money CBN injects to those banks are that of the country/Taxpayers, and LAMIDO sanusi should stop talking as if the monies belongs to him or CBN in isolation.

Good observation, that is why I mentioned nationalization, because at the moment the banks are controlled as if they are govenment owned, so why not make it official.  Every regime will probably change the CBN govenor and the new govenor will decide to make a name for him/herself, whist pursuing the narrow agenda of that administration. 

The CBN needs to be INDEPENDENT of political interference and well regulated.  The govenor must act according to the law, where is Yaradua's rule of Law? And where dose Soludo come into all of this? If what Mr Lamido is alledging is true, then the former CBN govenor is just as guilty for not raising the alarm about the so-called illegal, dangerous paractices.

Are we to believe that the CBN was blind and soft until Mr Sanusi came along?

@noLongTing

The constitution of Nigeria along with laws and statutes give the CBN power to remove bank CEO's under certain circumstances of which this particular situation qualifies. Its not the he's acting as if the govt. owns the banks, its because the CBN is charged with the responsibility of overshight and regulation of all nigerian banks, so private or public doesn't even matter. I agree that his actions may not have been the wisest option but he has the power to do it "legally" but i still support him and his actions since it nevertheless is an attempt on his part to clean up the system.

gadogado:

@noLongTing

The constitution of Nigeria along with laws and statutes give the CBN power to remove bank CEO's under certain circumstances of which this particular situation qualifies. Its not the he's acting as if the govt. owns the banks, its because the CBN is charged with the responsibility of overshight and regulation of all nigerian banks, so private or public doesn't even matter. I agree that his actions may not have been the wisest option but he has the power to do it "legally" but i still support him and his actions since it nevertheless is an attempt on his part to clean up the system.

Well I am no legal expert, but the manner in which the executives were removed was hasty and scrappy.  As far as whether it was legal or not, time will tell as the former Intercontinental Bank chief Erastus Akingbola has already asked the federal court to reinstate him and he is demanding 50 billion naira ($333 million) in damages. 
http://www.reuters.com/article/usDollarRpt/idUSLL9267520090821

Any sensible Nigerian regardless of their ethnicity will approve Mr Sanusi 'Intentions' to clean up the financial system.  However, most will not be happy with the short-term damage and the long-term prospect of Nigerian banks being taken over by foreigners.

So for now, all we can do is wait for events to unfold and hope that the new govenor's actions turn the Nigerian banking system into one of the best in the world.