How has this been the fault of Sanusi and the CBN?
Without CBN's move, the whole Nigerian banks could have been swallowed up and th people that have taken all the loans will now come back and use same money to buy the banks and me and you will now be a slave in our own father's palace.

@naijaking1

I dont see why your are so blinded by the fact that what happened in NIGERIA or is happening in Nigeria is something that has supposed to have happened a long time ago at the same time as rest of the world. your are just putting your frustration and annonyance in the wrong place. i am not in naija as i said i have workd as a financial advisor in the uk and can boast of having footballers as one on my customers google Baines &Ernst and Blair Endersby thery are IVA and DMP & Administer Bankruptsy as well i was a senior member of staff there before i resigned and i have dealt with thousands of people with debt problems and cureentyl work as a recovery agents for All the banks in the uk ok. so i dont know who sanusi is and morover as i said earlier. put aside tribalism, sentiments,frustration,anger and annonyance. and if you are a professional. you will understand what is happening is bound to happen, it should have happened since but was being delayed by bunch of crooks and to be frank with you, this shouldnt have affected Nigerians financial institution much but it did because of the greedy people such as ibru, akingbola, who allowed themselves to go against all the professional banking ethics. 

NB

naijaking1:

I laugh at you tribal/religious bigots on this forum, I see how you're trying desperately to change this whole story so that Soludo will be blamed, unfortunately, you have nothing against him, zip!

Meanwhile try correct your boy Sanusi, or ask him to resign so that somebody like Tunde Lemo who understudied Soludo for the past 4 years can clear up the self destrcutive mess he has made in 2 months.

You see, it hard to build, and easy to destroy. It took our banking sector many years to gain some respect internationally, and all it took was a rage of drunken stupor by a questionably qualified sanusi to destroy everything.

Most unfortunately, people like you are still supporting him out of ignorance, stupidity, religious or tribal gingoism------ Idon't know.
For your information, the 5 banks are not the only ones in trouble now, if you read the World bank article you will see that all Nigerian banks are directly or indirectly affected.

i am not being tribalistic or religious and to be frank with you, i dont care who takes over the job as long as who ever has the job is doin a great job and has a clean and clear ways and also as long as its not politically motivated. also i have played ball in the international legue especially uk to be prescise so therefore i am not ignorant and neither am i stupid. i dont think you actually know what PROFESSIONALISM is also dont think you actually understand the GENESIS of what brought abput the banking crises which cleaerly is the handwork of individuals. and as i said earlier SANUSI has my support as a fellow banker and professional as long as he doesnt have any political hidden agenda. and wants to better the NIgerian Banking secotr because i am coming to contibute my own quota in a short while to the banking secotr to make it better.

@fhemmy

thanks i think a few nairalanders actually need to be educated well on what has happened or what is happening in naija. this is not the fault of cbn or sanusi it is the fault of greedy individuals period and their supporters as well. the move the cbn has taken is the best way so far and there is no way it will affect 5banks and not affect all, it will definately do so, but one things i believe is that if sanusi is for real and doesnt have any polotical or hidden agenda then things should get back to normal but it will take a while.

There is growing concern among officials of the World Bank and other international credit lending bodies over the ongoing reform in the Nigerian banks, aftermath of the sack of some bank chiefs recently by the Central Bank of Nigeria (CBN) Governor, Lamido Sanusi.

The World Bank and other international lending institutions that support both the government and private business organisations in Nigeria are said to be raising queries over the recent actions of the CBN. Sanusi sacked five bank chief executives on August 14 and handed them over to the security agencies for criminal trial in the courts.

The Chief Executive Officers of Oceanic (Cecelia Ibru), Intercontinental (Erastus Akingbola), Afribank (Sebastine Adigwe), Finbank (Okey Nwosu) and Union bank (Barthelomew Ebong) as well as those of some of their subsidiaries were affected by Sanusi's action and are being prosecuted by the Economic and Financial Crimes Commission (EFCC).

An official of the World Bank, who pleaded not to be mentioned, told Sunday Independent that the apex world financial institution was particularly concerned about the legality or otherwise of the CBN actions, especially as it concerns the N400 billion bail out extended to the troubled banks without an enabling law by the nation's National Assembly.

"What the CBN has done may have saved the banks in question from going under, but it has also definitely affected Nigeria's international credit rating negatively. The international financial institutions now view Nigerian government and businesses with suspicion as regards their credit rating.

"They are not comfortable that the CBN governor could release such a huge sum of money to privately owned banks without an enabling law by the National Assembly and I think that is what Mr. Sanusi has been labouring to explain to them during his trips to London and China recently," said the official.

Especially disconcerting to the international financial community, according to the official, was the explanation Sanusi gave in London to the effect that the CBN had to print money to shore up the dwindling capital base of the five troubled banks. "They were taken aback that Sanusi could do all that without an enabling law by the National Assembly," the official said.

The World Bank official said corresponding financial institutions overseas which lend money to Nigerian businesses may stop such credit facilities until confidence is restored in the Nigerian financial sector.

"You are aware that some banks abroad give short term loans to Nigerian businessmen, especially importers of finished goods. Some of the foreign banks may not extend such loans now, especially as the credit facilities are guaranteed by some Nigerian banks, including the five troubled ones.

"Another source of worry to the international financial institutions is the silence of the Nigerian authorities on the CBN action. Although, the authorities have said they support the action by the CBN governor, they did not say whether it was part of the government's economic reform policy and state the direction it is going. "They are still confused about how the CBN could invest public funds to shore up the working capital of privately owned banks without explaining whether it was a loan or equity fund and how it would be returned to the public purse. These are very sensitive issues to the banks abroad, especially in these days of economic meltdown when most of them are struggling to stay afloat," he said.

He said most importers would soon feel the impact of the reactions of their foreign lenders except the Federal Government moves fast to clear their areas of anxiety. Particularly at risk are the major importers of refined petroleum products who often use such credit lines to sustain regular importation of fuel into Nigeria.

A major fuel shortage, which could ground Nigeria's economy to a halt is looming as banks have placed restrictions on lending to major oil marketers who are responsible for the importation of over 60 per cent of petroleum products into the country.

Investigations by Sunday Independent revealed that many marketers are already running short of funds.

Lending banks, it would be recalled, took to this new measure following the on going auditing of their operations by the CBN, which has led to the arrest and continued detention of many banks' CEO.

Executive Secretary of the Major Oil Marketers Association of Nigeria, (MOMAN), Thomas Olawore confirmed the threat of withheld credit for the petroleum products importers, adding that MOMAN has communicated its predicament to the Federal Government and requested its urgent intervention.

" Our members, especially those whose names appeared on the CBN debtors list have complained that their letters of credit are not being honoured by the corresponding banks abroad. If the government does not act fast, this situation may affect the importation of petroleum products into Nigeria soon.

"I have sent mails to members on this subject and as you can see I am still waiting for their response before we can know how best to answer the questions," he told this newspaper in a telephone chat.

A Managing Director of one of the major marketing companies, who spoke with Sunday Independent, noted that the country would be sorry for the actions of the CBN governor if not properly and urgently modified.

He said further that it is not possible to avoid a fresh rounds of petroleum products scarcity as most marketers and importers are now faced with the problem of trust from corresponding banks as letters of credit from Nigerian banks are not being honoured by the corresponding banks.
http://www.independentngonline.com/news/tfpg/article02
mumu people.

Most of these Nigerian newspapaers journalist just print rubbish, they are painting a picture of what has happened as a sacrilage. these business men and managers that are complaining are the beneficiaries of the so called uncollaterised loans why wouldnt they want to protect their own interest ? they are complaining of it affecting businesses, regardless of what has happened the banks that are healthy in nigeria should be able to pull through an example is Barclays Bank. HSBC, they didnt collect any bailout money and they are doing fine so if the healthy banks adapt the same methids used then they might be able to overcome the crisis. there is actually a guy that is thr owner of a oil and gas company in lagos. that commented on the crisis saying sanusi action was uncalled for. this same guy owes his staff more than 7months salary and his sister from the village drives an 07vw passat.

Blaze
<sup>Have you heard of Standard Chartered Bank, one of the only financial institutions that successfully managed the financial crisis? That bank is focused on trade finance. They have branches all over Asia, Europe and the Americas. They also have a licence to operate in Nigeria. If you are a serious businessman and your bank's LCs are being rejected by foreign banks, there is always the alternative of moving your account to Standard Chartered or Citibank Nigeria especially as they do not have to go through a correspondent bank.

This is just one example that shows the flaws in Guardian's argument.A</sup>
What's the geographical spread of Citibank in Nigeria? I was told by a Citibank banker that they ve got no individual banking service in Nigeria. I think they are only for institutional bankers, big conglomorates, govts and investors as a  conduit for capital flight

What's the geographic spread of Standard Chartered Bank in Nigeria as well?  They all have limited penetration into the Nigerian formal sector. These two banks as mentioned represent 8.3% of the banks in Nigeria and Chartered bank has branch locations in only 6 states  out of 36 states including FCT, so their market coverage is  very limited. I am yet to find a Citi location in Nigeria besides their huge edifice by American Embassy in Nigeria.  Also ur assertion seems  to imply that Citibank is solid, it was bailed out by US govt and it's share sold for less a dollar , so an investor in Nigeria who held Guiness and Nestle shares   was worth more money than an investor who held citibank stocks.

The recent Central Bank of Nigeria ’s (CBN) removal of some banks’ chief executives over their debts overhangs will certainly take its toll on various sectors of the economy. Even if the action was genuinely intended, the adverse consequences of such moves have much more far-reachingimplications than envisaged.
Two most critical areas of the economy have fallen victim to this action. These are the downstream sector of the petroleum industry, a sector to which the banks have high exposures that have resulted in the non-performing loans.
The power sector is the first casualty as government’s planned 6000 megawatts of electricity by December this year has become estranged.
This is because the manufacturers of some of the equipment meant for some of the National Integration Power Projects (NIPP) have informed their Nigerian customers that they will stay action on the equipment they were asked to manufacture, pending the time the dust raised by the action settles down.
One of the companies handling the projects, Rockson Engineering Limited, was said to be owing N36.9 billion as alleged by the CBN. However, the figure the company has raised serious objection about, saying it is only owing N14.423 billion and not what the CBN claimed.
Speaking recently in Lagos, chairman of the company, Aniete Okon, said “for avoidance of doubt, our reconciled and mutually agreed commitment with Intercontinental Bank is N14, 423, 291, 589, 041 (fourteen billion, four hundred and twenty-three million, two hundred and ninety-one thousand, five hundred and eighty-nine and forty-one kobo.”
According to Okon, the exposure to the bank derives directly from the provision of credit facilities to substantially fund the letters of credit for turbines and balance of plant equipment for the execution of Federal Government’s NIPPs, comprising the construction of power stations at Alaoji, Gbarain, Egbema, and Omoku, over which it invoices on certified progress and stand at nearly $800 million.
The company’s chairman therefore noted that to classify the status of it account with Intercontinental Bank as non-performing was to say the lest, and very misleading, adding that the company had completed 70 percent of it site erection and construction services without receiving any payment from the Federal Government.
But more depressing was the bombshell the managing director of Rockson Engineering, Johnson Arumemi, dropped when he disclosed that the manufacturers of some of the equipment that were to be used at the power plants had called to say that they were stopping work on the equipment.
Because their confidence in the letters of credit (LC) opened on the company’s behalf is doubtful in view of what is currently going on in the country’s financial sector, according to Arumemi, he does not think that his company can meet any bank for money to complete the NIPPs as they would tell you to go and meet the Federal Government to collect the needed money. We can only work with what we have.
The NIPPs suffer serious funding problem before the House of Representatives probe of the contracts, and the probe stalled works on the projects for a long while.
He further stated that for a long while the government did not pay for the NIPPs before they were rocked by probes carried out by the House of Representatives Committee on Power, which made some grievous allegations that money was paid and the contractors bolted away with the money meant for the projects.
Just as the dust raised by the probe was about to settle, the CBN came up with its non- performing debt saga, which would further delay the projects. To this end, the government has failed on its part to fulfil it own part of the bargain.
“We were given letter of credited by the CBN which was partially funded. We handed over the letter of credit to Intercontinental Bank as collateral and the bank open another letter of credit through another arrangement with PNB Paribas. The bank gave us money for site construction including Bank PHB too, which gave the company money for site construction,” he disclosed.
When President Umaru Yar’Adua administration came in, it stopped the funding and just recently Vice President Goodluck Jonathan-led committee on Power, which includes some of the state governors visited the projects and promised to pay some $230 million to the company within two weeks. The two weeks became four months. And just in June this year, the government decided to open another letter of credit, but there was delay in releasing the $230 million, which was approved around July, and to draw done this amount was a big problem.
“The company has not received one kobo from the Federal Governments for the jobs done on the sites of the projects for the construction and erection services and transportation.
The crossing of Imo River with the turbines has not been paid for by the government.” Foreign banks may have started to cancel credit lines to some Nigerian companies on account of what is happening in the financial sector.
Two managing directors of oil and power companies confirmed this development, saying they have received several calls from their business partners across the world telling them about the misgiving the banks in their countries have about the integrity of the letters of credits that have emanated from Nigeria .
For instance, PNB Paribas has already suspended transaction with Intercontinental Bank, claiming that it is not sure of the situation in Nigerian financial sector.
The other strategic segment that would suffer as a result of this action is the downstream subdivision of the petroleum sector. The operators of the sector would now have limited access to fund and thereby shrinking the supply of petroleum products to the country.
It would further worsen the unemployment situation in the country, as the small scale businesses that depend on using petroleum products for their businesses would have to pay more.

http://www.businessdayonline.com/index.php?option=com_content&view=article&id=4719:strategic-sectors-experience-setbacks-from-cbn-action&catid=68:power&Itemid=308

that,s for you axeman

who dey delete people post for this place, abi una no want truth to come out abi?

http://www.businessdayonline.com/index.php?option=com_content&view=article&id=4719:strategic-sectors-experience-setbacks-from-cbn-action&catid=68:power&Itemid=308

axeman this is for you.

@adconline,

Citigroup and SCB don't have more than 20 branches between them in Nigeria. Still they manage to corner a huge percentage of the international trade business because they are foreign-owned banks.

It is true that Citigroup, Citibank's parent company was bailed out by the US government and booted off the Dow Jones index. However, this was because they had experimented with a "financial supermarket" model that eventually failed.

On the contrary, Citibank Nigeria Limited recorded abnormal profit for the last financial year. I was at their AGM and it was a cash bonanza for shareholders (It is not listed on the stock exchange).

And as I pointed out earlier, The Guardian has not named any banks to support its report. I can assure you that Diamond, GTBank, First Bank, UBA and company are not facing this LC acceptance problem.

yes O! people should be reasonable enough to
pause for a second and say "yes, this mainly affects my
people but is the action right?"
so far, Sanusi is doing a great job and for those who are talking
of consequences of his actions, ask yourselves, what would have been the
result of inaction.
Peeps, you can't have Omelette without cracking the egg(s) plssssssss!

why is everyone wasting their time on this story, it is very clear to see that Guardian newspaper has a vested interest in it's attempt to discredit Sanusi, it has an ongoing smear campaign against Sanusi since he sacked one of their proprietors in the name of Cecelia Ibru.  I believe you all know that Guardian newspaper is owned by the Ibru family so what do you expect.

@df2006
In journalism, there is what is called attribution and
all Sunday Independent has done is use a lot of it.
An official of the World Bank, who pleaded not to be mentioned-So are you saying it is not the official position of the world bank but that of one faceless official who refuses to be mentioned.
Pls no faceless official can speak for the world bank.
Agreed, the world bank may have reservations but it has ways of making that known, not through faceless officials being bandied about by one faceless journalist who wants to achieve God knows what.
Stop playing the ostrich please

axeman85:

@naijaking1
I dont see why your are so blinded by the fact that what happened in NIGERIA or is happening in Nigeria is something that has supposed to have happened a long time ago at the same time as rest of the world. your are just putting your frustration and annonyance in the wrong place. i am not in naija as i said i have workd as a financial advisor in the uk and can boast of having footballers as one on my customers google Baines &Ernst and Blair Endersby thery are IVA and DMP & Administer Bankruptsy as well i was a senior member of staff there before i resigned and i have dealt with thousands of people with debt problems and cureentyl work as a recovery agents for All the banks in the uk ok. so i dont know who sanusi is and morover as i said earlier. put aside tribalism, sentiments,frustration,anger and annonyance. and if you are a professional. you will understand what is happening is bound to happen, it should have happened since but was being delayed by bunch of crooks and to be frank with you, this shouldnt have affected Nigerians financial institution much but it did because of the greedy people such as ibru, akingbola, who allowed themselves to go against all the professional banking ethics.  

NB
i am not being tribalistic or religious and to be frank with you, i dont care who takes over the job as long as who ever has the job is doin a great job and has a clean and clear ways and also as long as its not politically motivated. also i have played ball in the international legue especially uk to be prescise so therefore i am not ignorant and neither am i stupid. i dont think you actually know what PROFESSIONALISM is also dont think you actually understand the GENESIS of what brought abput the banking crises which cleaerly is the handwork of individuals. and as i said earlier SANUSI has my support as a fellow banker and professional as long as he doesnt have any political hidden agenda. and wants to better the NIgerian Banking secotr because i am coming to contibute my own quota in a short while to the banking secotr to make it better.

I just noticed that I have not interacted with you before, and to the extent that you might have felt disrespected, I apologize.
Your understanding of the banking problems in Nigeria vis-a-viz the solution is quite wrong. I have debated this issue with tribally and religiously biased people on this forum for months, and I, naturally do get frustrated sometimes.

No doubt Sanusi is a good man, but is he the best banker to head our small and emerging banking industry at this time, I said no, some people said yes. My position is based on the fact that Sanusi with his specialization in risk management continues to see banking like the blindmen on the elephant---oh, it's like a tree trunk, or it's like a big broad fan, or it a very long tusk, but we know the elephant is all that and more. The banking industry is made of Advances/Risk Management, Consolidation, Foreign exchange, etc. We need a CBN governor who would see the whole elephant, not the parts.

You made mention of Sanusi not having a tribal agenda agenda. I don't know about that, because you may be just naive, or you don't know about his position on sharia banking and selling the banks to foreigners/northerners, etc. Also, remember the Vanguard article of March 2009 that accurately predicted what Sanusi is doing to the letters. He sure did, taking over 5 banks named in the article 6 months afterwards.

Also, any further damage to the reputation of Nigeria, especially the banking sector, will not only affect other banks, but every Nigerian in general, so I don't understand why this has to be a tribal issue.

Please don't make this excuses about the global banking crises that took place late year and earlier this year, it took great skills to guide Nigeria's banking industry safely through that turmoil. There's no question that there were a few problems with our banking sector(loan shaking, favoritism,etc), but then which sector in Nigeria did we not have problems? Anyway, it's not good to creat more problems while trying to solve a small one, and that's what Sanusi CBN has done.

Bunch of hot air.

Banks will only reject letters of credit if they think the other bank is in trouble. Its business, nothing personal.

If this story is true (gotta be wary of Ibru-owned newspaper stories) then we may expect the situation to continue until all audits are completed by CBN.

I don't know why we have failed to call a spade a spade, i knew this was gonna happen,
Sunusi might right but the approach was totally wrong knowing how sensitive the sector is in a world's labelled most corrupt nation on earth.
The US banks an other nations had the same problem as Nigerian banks, as a result of the same bad debts, we never heard them publicising the names of the debtors nor sacking the CEO's of the banks involved, they instead quietly tackled the problem and now quietly restoring the banks to order along side with the Economic recession,

Please can someone tell us wht Sunusi achieved in Shouting and telling the whole world how bad the problem in Nigerian banks is, creating alarm to a sector he knows how sensitive it is in every country's economy?
The effect is exactly wht we are facing now, only those who are not into international business will underestimate the effect of His action.

When his actions begin to affect ordinary Nigerians like me then i think we need to speak out, Infact for the past month i have missed more than 5 deals coz of his actions, at the moment No company is from china is ready to transfer their LC down to Nigeria how much to receive, almost 5 companies have told me openly, 'sorry sir we can never transfer our LC to Nigeria' and there it ends be it Citi bank or standard chattered as long they operate within the name of a country called Nigeria.
LC has been the most secured means of payment recently at the international market, so if Nigerian LC is not being recognised by other international banks and foreign companies are scared of releasing LC to Nigeria then we are approaching to the dead end.

We should try to see this beyond tribe coz its affecting every Nigerian at the moment be you north, east, west or south,

Ibime:

Bunch of hot air.

Banks will only reject letters of credit if they think the other bank is in trouble. Its business, nothing personal.

If this story is true (gotta be wary of Ibru-owned newspaper stories) then we may expect the situation to continue until all audits are completed by CBN.

First we condenm Vanguard for being against Sanusi, now we condenm Guardian too. Which paper is next?

princekevo:

I don't know why we have failed to call a spade a spade, i knew this was gonna happen,
Sunusi might right but the approach was totally wrong knowing how sensitive the sector is in a world's labelled most corrupt nation on earth.
The US banks an other nations had the same problem as Nigerian banks, as a result of the same bad debts, we never heard them publicising the names of the debtors nor sacking the CEO's of the banks involved, they instead quietly tackled the problem and now quietly restoring the banks to order along side with the Economic recession,

Please can someone tell us wht Sunusi achieved in Shouting and telling the whole world how bad the problem in Nigerian banks is, creating alarm to a sector he knows how sensitive it is in every country's economy?
The effect is exactly wht we are facing now, only those who are not into international business will underestimate the effect of His action.

When his actions begin to affect ordinary Nigerians like me then i think we need to speak out, Infact for the past month i have missed more than 5 deals coz of his actions, at the moment No company is from china is ready to transfer their LC down to Nigeria how much to receive, almost 5 companies have told me openly, 'sorry sir we can never transfer our LC to Nigeria' and there it ends be it Citi bank or standard chattered as long they operate within the name of a country called Nigeria.
LC has been the most secured means of payment recently at the international market, so if Nigerian LC is not being recognised by other international banks and foreign companies are scared of releasing LC to Nigeria then we are approaching to the dead end.

We should try to see this beyond tribe coz its affecting every Nigerian at the moment be you north, east, west or south,

The reason why you didnt hear is because you are probably in naija if you are in the uk you will know that most of these banks affected RESIGNED before they could be sacked and they had to take pays== cut as well as pension cut an example is FRED THe SHRED who was head of RBS

naijaking1:

I just noticed that I have not interacted with you before, and to the extent that you might have felt disrespected, I apologize.
Your understanding of the banking problems in Nigeria vis-a-viz the solution is quite wrong. I have debated this issue with tribally and religiously biased people on this forum for months, and I, naturally do get frustrated sometimes.


No doubt Sanusi is a good man, but is he the best banker to head our small and emerging banking industry at this time, I said no, some people said yes. My position is based on the fact that Sanusi with his specialization in risk management continues to see banking like the blindmen on the elephant---oh, it's like a tree trunk, or it's like a big broad fan, or it a very long tusk, but we know the elephant is all that and more. The banking industry is made of Advances/Risk Management, Consolidation, Foreign exchange, etc. We need a CBN governor who would see the whole elephant, not the parts.

You made mention of Sanusi not having a tribal agenda agenda. I don't know about that, because you may be just naive, or you don't know about his position on sharia banking and selling the banks to foreigners/northerners, etc. Also, remember the Vanguard article of March 2009 that accurately predicted what Sanusi is doing to the letters. He sure did, taking over 5 banks named in the article 6 months afterwards.



Also, any further damage to the reputation of Nigeria, especially the banking sector, will not only affect other banks, but every Nigerian in general, so I don't understand why this has to be a tribal issue.

Please don't make this excuses about the global banking crises that took place late year and earlier this year, it took great skills to guide Nigeria's banking industry safely through that turmoil. There's no question that there were a few problems with our banking sector(loan shaking, favoritism,etc), but then which sector in Nigeria did we not have problems? Anyway, it's not good to creat more problems while trying to solve a small one, and that's what Sanusi CBN has done.

Sorry but i beg to differ from the fact that you said my understanding of the Nigeria banking problem is quite wrong. professionally, i have had the opportunity of being in Nigeria 3times this year and i have looked round and also spoken to friends in the banking secotr as well who are professionals, and i belive i understand well what is happening

In regards to this section, what i said was as long as he doesnt have any political agenda then he has my support
and yes if it affects 1 bank it it bound to affect the rest its very simple its like you pouring palmoil into a pot of rice , definately the palmoil will touch most or all of the rice in the pot but at the end all na to cook jollof rice thats exactly whats is going to happen.  ASLONG AS IT ISNT POLITICALLY MOTIVATED but Nevertheless i still say sacking the banks CEO is the best action as well as exposing the Non performing loans becasue if he hadnt thise banks will have continued with their unhealthy practice and ruin this bank because they built up these banks doesnt mean they have to destroy it and bring it back to its knees

i personally dont call this expertise its espertise fraudlently and deceit which is more than treachery as i said earlier all they did was delay the suffernessand crisis which if had been exposed earlier at least we also would have been on the road to recovery by now

Gblaze

^{Citigroup and SCB don't have more than 20 branches between them in Nigeria. Still they manage to corner a huge percentage of the international trade business because they are foreign-owned banks.}

Citibank serves a bullion van for foreign companies, banks and govts in Nigeria. Citibank moves money for nearly all the Nigerian banks, so there is no way Naija banks can compete with them, but we are talking about LC here.

^{On the contrary, Citibank Nigeria Limited recorded abnormal profit for the last financial year. I was at their AGM and it was a cash bonanza for shareholders (It is not listed on the stock exchange).} 

because they dont do mama put banking Naija banks  are engaged in, so how could assert that there is no problem in LC because 2 banks out of 24 banks are OK? The reason why these two banks might be doing on LC is because of their global network.

_{And as I pointed out earlier, The Guardian has not named any banks to support its report. I can assure you that Diamond, GTBank, First Bank, UBA and company are not facing this LC acceptance problem.}

This is the reason why foreigners are more scared of LC from non globalised Naija banks like UBA, GTB and First Bank. Its all about confidence, a bank in China doesn’t want to know the name of the bank, all they know  is the  liquidity problem in Naija. Any day shares of a big bank in Dow, S&P, FTSE are downgraded they tend to drag stocks of their banking entities with them. There is a correlation in this article and  we could point to the causal effect

Quote from: Ibime on Today at 09:17:52 PM
Bunch of hot air.

Banks will only reject letters of credit if they think the other bank is in trouble. Its business, nothing personal.

If this story is true (gotta be wary of Ibru-owned newspaper stories) then we may expect the situation to continue until all audits are completed by CBN.



First we condenm Vanguard for being against Sanusi, now we condenm Guardian too. Which paper is next? Quote Naijaking 1



I am fed up with your not too insightful comments, must you be fed with the truth before you believe that in this kind of issue one should not believe what you read in the dailies because most of these Newspaper had one or two things with the axed banks.

You have been championing the Religious/tribalistic/not Competent sanusi all other Nairaland but the funny part is you shows so many traits in the opinion u have gave so far.

Let me advise you, your PR is not working, thank GOD we still have people that will stand for the truth with doggedness and tenacity without being swayed by your SYMPATHY for the 5 ceo booted out.

Please you need not call names when you Argue, this should be a forum where we can do our own bit by encouraging that we can change these our GREAT NATION. we have nowhere to go please.

Remember, Irrespective who the CBN Gov is we will all support him if he takes the right decision in the right Direction.

I believe he has done that, whatever we are experiencing its for a short while.we are getting there.

@adconline,


Our good banks are doing fine. I think it would have been much worse if some banks had collapsed and tainted the entire banking sector.

Our good banks are doing fine. I think it would have been much worse if some banks had collapsed and tainted the entire banking sector

Normal Naija way of thinking, sweeping everything under the carpet. What's ur barometer for measuring banks that are doing fine. The discussion is about how foreign banks reject LCs

First of all, there is no evidence that foreign banks have rejected LCs. Even if they have, it will not affect banks that have passed the stress test. In case you do not know, some of these banks are going to the market very soon to increase their capital base through bonds.

I doubt if they will have such problems when it is obvious that they can withstand external and internal shocks.

An LC does not have to be a credit facility. If you are a businessman and your bank can no longer support your business, simply move your account to another bank.

BTW, I find that snide "normal naija" remark very distasteful. Do not use it again when you are referring to me.

axeman85:

The reason why you didnt hear is because you are probably in naija if you are in the uk you will know that most of these banks affected RESIGNED before they could be sacked and they had to take pays== cut as well as pension cut an example is FRED THe SHRED who was head of RBS

This is something I do not get when people argue Sanusi should not have fired the CEO's, they claim the U.K and U.S banks (and institutions such as AIG, GM) that got bailed out still have the same CEO's, which is not true.

@bialegend and beaf Must you communicate always through aggressive responses. In fact, must you contribute at all? If you cannot converse in a logical, composed and respectful manner then nobody wants to hear from you. HABA!!!!! Una be small pikin?

Concern in World Bank over Sanusi's bank reforms
By Emma Chukwuanukwu, Assistant News Editor and Adeola Yusuf , Correspondent, Lagos

There is growing concern among officials of the World Bank and other international credit lending bodies over the ongoing reform in the Nigerian banks, aftermath of the sack of some bank chiefs recently by the Central Bank of Nigeria (CBN) Governor, Lamido Sanusi


The World Bank and other international lending institutions that support both the government and private business organisations in Nigeria are said to be raising queries over the recent actions of the CBN. Sanusi sacked five bank chief executives on August 14 and handed them over to the security agencies for criminal trial in the courts.

The Chief Executive Officers of Oceanic (Cecelia Ibru), Intercontinental (Erastus Akingbola), Afribank (Sebastine Adigwe), Finbank (Okey Nwosu) and Union bank (Barthelomew Ebong) as well as those of some of their subsidiaries were affected by Sanusi's action and are being prosecuted by the Economic and Financial Crimes Commission (EFCC).

An official of the World Bank, who pleaded not to be mentioned, told Sunday Independent that the apex world financial institution was particularly concerned about the legality or otherwise of the CBN actions, especially as it concerns the N400 billion bail out extended to the troubled banks without an enabling law by the nation's National Assembly.

"What the CBN has done may have saved the banks in question from going under, but it has also definitely affected Nigeria's international credit rating negatively. The international financial institutions now view Nigerian government and businesses with suspicion as regards their credit rating.

"They are not comfortable that the CBN governor could release such a huge sum of money to privately owned banks without an enabling law by the National Assembly and I think that is what Mr. Sanusi has been labouring to explain to them during his trips to London and China recently," said the official.

Especially disconcerting to the international financial community, according to the official, was the explanation Sanusi gave in London to the effect that the CBN had to print money to shore up the dwindling capital base of the five troubled banks. "They were taken aback that Sanusi could do all that without an enabling law by the National Assembly," the official said.

The World Bank official said corresponding financial institutions overseas which lend money to Nigerian businesses may stop such credit facilities until confidence is restored in the Nigerian financial sector.

"You are aware that some banks abroad give short term loans to Nigerian businessmen, especially importers of finished goods. Some of the foreign banks may not extend such loans now, especially as the credit facilities are guaranteed by some Nigerian banks, including the five troubled ones.

"Another source of worry to the international financial institutions is the silence of the Nigerian authorities on the CBN action. Although, the authorities have said they support the action by the CBN governor, they did not say whether it was part of the government's economic reform policy and state the direction it is going. "They are still confused about how the CBN could invest public funds to shore up the working capital of privately owned banks without explaining whether it was a loan or equity fund and how it would be returned to the public purse. These are very sensitive issues to the banks abroad, especially in these days of economic meltdown when most of them are struggling to stay afloat," he said.

He said most importers would soon feel the impact of the reactions of their foreign lenders except the Federal Government moves fast to clear their areas of anxiety. Particularly at risk are the major importers of refined petroleum products who often use such credit lines to sustain regular importation of fuel into Nigeria.

A major fuel shortage, which could ground Nigeria's economy to a halt is looming as banks have placed restrictions on lending to major oil marketers who are responsible for the importation of over 60 per cent of petroleum products into the country.

Investigations by Sunday Independent revealed that many marketers are already running short of funds.

Lending banks, it would be recalled, took to this new measure following the on going auditing of their operations by the CBN, which has led to the arrest and continued detention of many banks' CEO.

Executive Secretary of the Major Oil Marketers Association of Nigeria, (MOMAN), Thomas Olawore confirmed the threat of withheld credit for the petroleum products importers, adding that MOMAN has communicated its predicament to the Federal Government and requested its urgent intervention.

" Our members, especially those whose names appeared on the CBN debtors list have complained that their letters of credit are not being honoured by the corresponding banks abroad. If the government does not act fast, this situation may affect the importation of petroleum products into Nigeria soon.

"I have sent mails to members on this subject and as you can see I am still waiting for their response before we can know how best to answer the questions," he told this newspaper in a telephone chat.

A Managing Director of one of the major marketing companies, who spoke with Sunday Independent, noted that the country would be sorry for the actions of the CBN governor if not properly and urgently modified.

He said further that it is not possible to avoid a fresh rounds of petroleum products scarcity as most marketers and importers are now faced with the problem of trust from corresponding banks as letters of credit from Nigerian banks are not being honoured by the corresponding banks.

http://odili.net/news/source/2009/sep/13/401.html Daily independent

bidemi12:

@bialegend and beaf Must you communicate always through aggressive responses. In fact, must you contribute at all? If you cannot converse in a logical, composed and respectful manner then nobody wants to hear from you. HABA!!!!! Una be small pikin?

I wonder,

Blaze

First of all, there is no evidence that foreign banks have rejected LCs. Even if they have, it will not affect banks that have passed the stress test. In case you do not know, some of these banks are going to the market very soon to increase their capital base through bonds.

Which capital market are you talking about? Who is going to be their underwriters when most investors have lost all their money? If you were an investment banker would advise your clients to lend money to these troubled institutions and hold their worthless IOUs till maturity?



An LC does not have to be a credit facility. If you are a businessman and your bank can no longer support your business, simply move your account to another bank. 

I know some things about international business, so  of what value is a piece of  paper  in form of  LC when my customer's bank doesn't accept it? It signals that foreign corresponds do not have confidence in our banks (including audited and non-audited) LC serves as a guarantor of payment. Common sense of risk analysis would tell you to be cautious of other Nigerian banks  because they might likely go down or be affected by ongoing crisis in the country. If ur argument holds true of cherry picking good and bad banks, why cant online stores like paypal,amazon,ebay accept Naija issued credit cards from Naija  good banks even though these good  banks are know by these online merchants and verisign verified ? They simply dont want to take a chance with Nigerian buyers. Banks dont want to be exposed  to the risk of dealing with Nigerian banks. Its delusional to think banks would not turn down Nigerian LCs, even when banks turned IOUs from a  big state like California because their lawmakers could not agree on a budget. How much more a jungle called Nigeria?

BTW, I find that snide "normal naija" remark very distasteful. Do not use it again when you are referring to me.

Sorry if my comment offended u, but I was alluding to the fact that we dont seem to agree that things are not working so long as  it doesn't really affect us. You started with  2 foreign owned banks, now you have expanded to audited banks. So if Dangote and Otedola are Forbes' categorized  billionaires does that invalidate the statement that half of Nigeria lives on less than $200 a day?

This issue of letter of credit is too complex for many people. Just wait until, you can't find petrol, medicines, and other foreign products, then some of you would understand what Sanusi has done.

It is shocking to see educated people that knows how to use the internet and even talk on the money section, to think that what Sanusi has done is a bad thing, there could be some underlyiing reason why they are all doing it, but that is not the point, and i refuse to have a conversation based on "might" or "maybe", i am basing my discussiion on the fact that these people has issued bad loans without collaterals and as the CEOs or the MD of those banks, they have gone against the ethics of their operations and they deserved to be fired.
The CBN was gonna invest 420B Naira into the banks and you expected them to now keep the fools that has made the banks to be what they ends up being?
Let us move beyond all these tribal jargons and come together as one Nigeria and be glad that someone did something.

@phemmy TRUE

Fhemmmy:

It is shocking to see educated people that knows how to use the internet and even talk on the money section, to think that what Sanusi has done is a bad thing, there could be some underlyiing reason why they are all doing it, but that is not the point, and i refuse to have a conversation based on "might" or "maybe", i am basing my discussiion on the fact that these people has issued bad loans without collaterals and as the CEOs or the MD of those banks, they have gone against the ethics of their operations and they deserved to be fired.
The CBN was gonna invest 420B Naira into the banks and you expected them to now keep the fools that has made the banks to be what they ends up being?
Let us move beyond all these tribal jargons and come together as one Nigeria and be glad that someone did something.

You just want to start this debate again, despite all signs that Sanusi screwed up.
Show me where it is written in our constitution that if you give out bank loan without collateral, you will be jailed. Giving out loans without collaterals maybe bad business judgement, but it is not a crime. Bad business judgements are usualy punished by the sharholders, and the board of directors. These shareholders whose actual money made up the banks were not even consulted, and their opinion is not sought. Even if it is a crime, they need to be given an opportunity to defend themselves, not locked up, and unable to defend themselves, unless the persecutor himself has something to hide.

When you talk about ethics of their profession, ethics as interpreted by who? Why don't you let the institute of bankers be the judge.

Fired? They were not only fired, but incacerated as if they have been duly tried in a court of law. How can you arrest somebody for a crime, then you begin to look for reasons to justify the arrest you've already made.

This is a cry for justice, for any human being, unfortunately, some of you are blinded by religious and tribal sentiments, but you'll be the first cry tribalism. get real.