http://money.cnn.com/2009/09/11/news/economy/bank_failure/

Ninety-two U.S. banks have failed so far this year, while the big names, e.g. Citi, are being propped up by government's money (through a long list of monetary instruments) to stabilize their economy.

Huge non-performing loans are hurting the US banks. Same in Europe. Nigeria is no different, except for our Crab Mentality (esctacy in pulling down people at the top), and other agendas.

For the records, I support criminal/civil prosecution of bank execs, if the law has been broken. However, it appears that naija bank chiefs got caught in a worldwide frenzy.

There were numerous options open for SLS to pursue in his commendable quest to strengthen the system; but he chose the most devastating to the system. Now, naija Letters of Credit (a capstone of international trade) are a piece of junk, and it is just the beginning of the bomerang.

Radicalism suits the Boko Haram enclave, not the CBN's Governor's office.

All he needed to do was to put the right framework in place to strengthen the system and if any bank refuses to re-adjust to the new order he will secretely take drastic measures to deal with the particular banks.

But what we rather saw was a political pundit and social critic doing what he knew how to do best, which is create a media circus. The sacking of 5 bank MDs in one day surely can't be in the strategic interest of our economy.

Now we have a CBN Governor who does not know the importance of Investor perception and confidence in the Banking sector. We have succeeded in destroying the reputation of our banking system and it will take another 5 - 10years to rebuild it.

Who says we could not have done this better
Some of us raised an alarm when this Sanusi circus started but people refused to see the big picture.

You know we live in a country where all our woes as a Nation can be traced to corruption whether its bad roads, poor hospitals, no electricity etc. And so with this victim mentality the natural instinct is to jump on any band wagon of Anti-corruption. But the truth is the CBN Governor need to be grown-up enough to see the big picture.

You need to strike a balance between Managing Risks and Growing the economy, creating an enabling environment for bussiness to thrive. However what we have seen in the last few weeks is the criminalization of what is a legitimate business process which is 'borrowing and lending'.
Creating a media circus in a knee-jerk way and ending up doing a trailer U-turn on the motorway after we saw very wicked shocks on the economy and it became evident that even the remaining banks were as guilty as the 5 banks targeted.

I hope the courts will put us out of this missery and re-instate these bank MDs immediately.

I love Ribadu and consider him my idle, but I will surely not fancy Ribadu as my CBN Governor nor Business secratary (what u call cormerce and industry minister in Nigeria).

Sanusi's courage, brillaince, stubborness and willingness to easily step on toes will be very helpful in re-making this country but those skills are surely not needed in the office of the CBN Governor.

A CBN Governor needs to see the big picture and most importantly put our Strategic Economic Interest as a Nation First.

^^^ Word! Tell 'em!!

Was it an urgent need to make a name for himself or it was done for the good of the country?Either way, Sanusi failed to look at the risk in taking such hasty decisions.Now that his lack of foresight have boomeranged ,who else will shoulder the burden and carry the disastrous effects ?NIGERIANS OF COURSE!

Some of the CEO's of the big banks that were bailed out were asked to resign or resigned.


Most of the small banks are not going under becasue of bad loans, majority are going under becasue the big banks are refusing to lend to them. The small banks usually get money by borrowing form big banks or through the inter-rate market, and in the U.S the big banks are hoarding the money.

In Nigeria it is the same thing. The small banks could not borrow money from the inter market because the rate was too high. The rate was high becasue there was suspicion among the banks that some of them are relying too much on the EDW and without knowing who is who, the net putter of money in the inter rate market jacked up their interest rate. Banks like intercontinental and Oceanic had the asset to borrow at that high interest rate, but small banks will not have the assets to do that. So in a way he was not only helping the big 5 banks but stopping them from dragging the small banks along.

For Sanusi to fulfill his Northern Agenda, he should have let the banks failed, a depositor who has N1million (or any amount above N100,000) in the bank will only get back N100,000 (if the NDIC cannot sell the bank at a good price, that is what is guaranteed by NDIC), then auction of the assets of the banks for cheap to his Northern brothers to fulfil the Northern Agenda.
In a way that is what is happening in the U.S. instead of private equity companies buying a company when it is about to collapse, they come after the FDIC takes over and buy the bank's assets at an auction.

McKren:

All he needed to do was to put the right framework in place to strengthen the system and if any bank refuses to re-adjust to the new order he will secretely take drastic measures to deal with the particular banks.

But what we rather saw was a political pundit and social critic doing what he knew how to do best, which is create a media circus. The sacking of 5 bank MDs in one day surely can't be in the strategic interest of our economy.

Now we have a CBN Governor who does not know the importance of Investor perception and confidence in the Banking sector. We have succeeded in destroying the reputation of our banking system and it will take another 5 - 10years to rebuild it.

Who says we could not have done this better
Some of us raised an alarm when this Sanusi circus started but people refused to see the big picture.

You know we live in a country where all our woes as a Nation can be traced to corruption whether its bad roads, poor hospitals, no electricity etc. And so with this victim mentality the natural instinct is to jump on any band wagon of Anti-corruption. But the truth is the CBN Governor need to be grown-up enough to see the big picture.

You need to strike a balance between Managing Risks and Growing the economy, creating an enabling environment for bussiness to thrive. However what we have seen in the last few weeks is the criminalization of what is a legitimate business process which is 'borrowing and lending'.
Creating a media circus in a knee-jerk way and ending up doing a trailer U-turn on the motorway after we saw very wicked shocks on the economy and it became evident that even the remaining banks were as guilty as the 5 banks targeted.

I hope the courts will put us out of this missery and re-instate these bank MDs immediately.

I love Ribadu and consider him my idle, but I will surely not fancy Ribadu as my CBN Governor nor Business secratary (what u call cormerce and industry minister in Nigeria).

Sanusi's courage, brillaince, stubborness and willingness to easily step on toes will be very helpful in re-making this country but those skills are surely not needed in the office of the CBN Governor.

A CBN Governor needs to see the big picture and most importantly put our Strategic Economic Interest as a Nation First.

There was already suspicion since October of last year that something was not right with the banks.

If he allow the banks to fail, he'll be accused of not helping them so the northerners can take over

McKren, what's the perception of nigerian banks before August 2009?
seems like you've been enjoying those adverts on CNN too much

Sanusi's courage, brillaince, stubborness and willingness to easily step on toes will be very helpful in re-making this country but those skills are surely not needed in the office of the CBN Governor.

naijatoday:

There was already suspicion since October of last year that something was not right with the banks.

The suspicions and controversy were all made-up by anti-consolidations forces

Dis Guy:

If he allow the banks to fail, he'll be accused of not helping them so the northerners can take over

McKren, what's the perception of nigerian banks before August 2009?
seems like you've been enjoying those adverts on CNN too much

well I reject the notion that the only choices available to us were to either 'do nothing' or 'create an economic upheveal'

I am sorry but the office of the CBN Governor is no place for marxists. Sanusi is failing and will ultimately fail if he is not stopped

McKren:

well I reject the notion that the only two choices available to us were to either 'do nothing' or 'create an economic upheveal'

I am sorry but the office of the CBN Governor is no place for marxists. Sanusi is failing and will ultimately fail if he is not stopped

Im sure people said the same thing when Soludo started the consolidation process, seems new policies are always shouted down initially, its early days. . .

mikeansy:

The suspicions and controversy were all made-up by anti-consolidations forces

How was it made up?

They claimed to have invested money in the Capital Market and Oil and Gas industry. The Capital market crashed, oil prices dropped from their highs.

They claimed to be solvent but got the CBN Governor to start EDW to help them. The 5 banks accounted for 90% of the money borrowed from the EDW.

The banks started useless promotions like oceanic bank and the football draw that they were doing.

They quietly started firing worker on the basis that they could not meet target.

They claim investment was still coming into the country, when Africa as a continent saw the second largest withdrawal of FDI.

The IMF or World bank stated earlier this year that  banks had a huge amount of bad loans in their books, they and the CBN denied it. Now they are planning to make provisions for non performing loans.

One bank went on the pages of a newspaper and asked the president of the country to become their official debt collector.


All this are anti-consolidated forces?

Dis Guy:

Im sure people said the same thing when Soludo started the consolidation process, seems new policies are always shouted down initially, its early days. . .

The economy is crashing

And I don't think any economy of the world will survive with Shake-ups every 5 years

All I think that was needed in this case was to put adequate lending frameworks in place, and bailout the failing banks if necessary with a mechanism put in place for repayment.

Running to the media and Sacking 5 Bank MDs in one day is not a Banking policy

And BTW those who shouted down the Banking consolidation years ago led by Atedo Peterside are at the vanguard of promoting the current Sanusi onslaught.

So this is not a case of people being resistant to change, this is just politics of 'who is up' and 'who is down' and I think the economy of 150 million people can not be used to engage in political tussles without putting into consideration the bigger picture.

This is why there must be due process, I PERSONALLY HOPE THE COURTS RE-INSTATE THE 5 BANK MDs.

Lest I forget, apart from sacking 5 MDs and dolling out 420billion has there been any change in the Banking process that led to the current bad loans? I doubt any framework has been put in place by the CBN.

None has been implemented nor announced.

Talking and acting tough is no replacement to good strategy.

McKren:

well I reject the notion that the only choices available to us were to either 'do nothing' or 'create an economic upheveal'

I am sorry but the office of the CBN Governor is no place for marxists. Sanusi is failing and will ultimately fail if he is not stopped

Thank you, and thank you again for words well spoken written.

I might also add that the office is no place for Igbo/Yoruba/Hausa tribalists, Islamic religious idealist, or even a social messiah; it's an office that should support our monetary system to the letters.

McKren:

The economy is crashing

And I don't think any economy of the world will survive with Shake-ups every 5 years

Someone has to do something someday!

McKren:

The economy is crashing

And I don't think any economy of the world will survive with Shake-ups every 5 years

All I think that was needed in this case was to put adequate lending frameworks in place, and bailout the failing banks if necessary with a mechanism put in place for repayment.

Yea, Abacha should have thrown away his military regalia for that well sewn Babariga- then declare democraZy

McKren:

The economy is crashing

And I don't think any economy of the world will survive with Shake-ups every 5 years

All I think that was needed in this case was to put adequate lending frameworks in place, and bailout the failing banks if necessary with a mechanism put in place for repayment.

Running to the media and Sacking 5 Bank MDs in one day is not a Banking policy

I'm with you one this one, He should have made them resign secretly , the media wont have a clue!

McKren:

The economy is crashing

And BTW those who shouted down the Banking consolidation years ago led by Atedo Peterside are at the vanguard of promoting the current Sanusi onslaught.

So this is not a case of people being resistant to change, this is just politics of 'who is up' and 'who is down' and I think the economy of 150 million people can not be used to engage in political tussles without putting into consideration the bigger picture.

Time will tell .  .  .  .

McKren:


This is why there must be due process, I PERSONALLY HOPE THE COURTS RE-INSTATE THE 5 BANK MDs.

Due process, well there was a lot as we can now see- some banks didnt release their end of te year balance sheet as at when due, some lend huge money to make paper money in the stock market, some lent to well know debtors including govt departments not bothering to get their money back (okay one bank actually begged the president to help them recover loans    )

I personally hope the MDs acknowledge their mistakes and seek forgiveness

McKren:

Lest I forget, apart from sacking 5 MDs and dolling out 420billion has there been any change in the Banking process that led to the current bad loans? I doubt any framework has been put in place by the CBN.

None has been implemented nor announced.

if you've been granted an 'uncollaterized' loan recently abeg fill me in
that cheque Jjimoh Ibrahim wrote to the bank the other day is for a CNN advert Mckren


When one recalls the large speculative loans given by the banks in 2006 and 2007 you remember a few paragraphs in the Advice to Bankers of 1863 one of which says “Pursue straightforward, upright, legitimate banking business.

‘Splendid financing’ is not legitimate banking and ‘splendid financiers’ in banking are either humbugs or rascals.” Bode Aug

I think it would be unwise to make a direct comparison between the Financial sector in Nigeria to most western countries(not to talk of the USA ).

Most of these countries have a well grounded financial sector with strong asset base,good regulatory frameworks(although that is debatable in a lot of them),cohesive and consistent policies that make room for a vibrant business enviroment.The reverse is the case in Nigeria,apart form the usual uspects like chaotic macro-economic policies,acute corruption,insecurity,poor infrastructural base etc, the most relevant to this discussion is investor confidence.

The assertion that 92 banks in US have failed in the OPs arguement is quite misleading.A lot of those banks are equivalents of community banks in Nigeria.While their demise are noteworthy in terms of economic analysis ,they cannot be used in terms of justifying an opposition to Sanusi's actions.

With the global downturn,a very weak economy like Nigeria cannot afford to pussy-foot around ,we dont have the time luxury that for eg the UK,US or Germany has.There is general concensus that in this economic age,Foreign Investments are crucial to the development of any developing nation of which Nigeria desperately needs to achieve its potential, Investors looks at the banks/financial sector in deciding whether to make FDIs or not.

I am fully aware that most policy intervention in Nigeria may have political undertones but on facevalue terms I would commend the CBN intervention .If we have a close look at this crisis Nigeria is one of the very few countries that have had the political fortitude to arrest bank executives and make them account for thier decisions,most countries have either pumped public money into banks to re-capitalise them or at best they let go of a few executives with millions of dollars in bonus( in some cases both have occured).

In contrast to the OPs position ,I think this would send a good signal to potential investors that Nigeria is re-positioning itself economically .

please someone go tell sanusi to jet out to the usa and help throw the ceo and directors of those 92 banks into jail!

Sanusi has caused so much damage to the Nigerian economy already.
Just thinking that the guy might be here for another five years is nightmarish

I want to correct an impression.
Why are we accepting Sanusi's propaganda that the five banks were failing? They had problems just like about every other bank both in Nigeria and the world over.Its not news that almost all the banks in the world had financial issues due to capital market (derivatives to be precise) and mortgage exposures.

If the banks were failing since October of 2008, how come all of them still had the capacity to fulfill their obligations towards their depositors?
10 months is enough time for a failing bank to collapse, but no they didn't.

Sanusi has the confidence and affontry to do what he did because we have an illiterate nation filled with people that think they are literate. A country where majority of the folks will celebrate any persecution as long as it is geared towards successful people.

The country is going to feel the impact of Sanusi's actions, but thinking of it. . . . . Nigerians deserve it. I feel sometimes like most Nigerians deserve this mess called Nigeria.

McKren:
This is why there must be due process, I PERSONALLY HOPE THE COURTS RE-INSTATE THE 5 BANK MDs.

Lest I forget, apart from sacking 5 MDs and dolling out 420billion has there been any change in the Banking process that led to the current bad loans? I doubt any framework has been put in place by the CBN.
None has been implemented nor announced.
Talking and acting tough is no replacement to good strategy.

Thank you man for bringing this point out. The guy doesn't seem to have any strategy geared towards progressing the economy.

Sanusi is stupid,

why cant we focus on our problems at home first.

South African banks are not affected by this whole collapse in the banking industry thats cause SA is one of the countries regarded as having the best policies and regulations in the world. So much so even the US is learning from them.(Thought I might share that with you guys).

If 92 american banks have failed what is stoping all the nigerian banks from failing.

well,we only need God help in naija

Cutting the head is never the solution to headache, it's just that top government officials use some to pull others down. Ribadu was hailed by all, but now he has to hide to come into his own country.

Hope that won't be the end of Sanusi and he should stop downgrading Nigerian banks.

God shall be with us.

quick in making decisions,that is what SLS got us into and the confidence that these bank have grown will fade like smoke from now on.

sayso:

quick in making decisions,that is what SLS got us into and the confidence that these bank have grown will fade like smoke from now on.

Yea confidence to lend money to anybody that can afford a jet but wont pay money back abi?

Smoke screen dont last mon ami

e be like say you be im broda the way you dey defend this sanusi man. i hope he will share his largese with you after his through with sacking all the banks' ceos under false pretext?

They could have done this differently, agreed.
Sanusi could have allowed some of the banks to go under, agreed.
But we are forgeting one things, we have a community where you cant do for one and not do for the other.
The banks were not asked who wanted the loan, the CBN just deems it fit to help the banks, however, Union bank in Nigeria is like Citi Bank, Union bank cant be allowed to go under, if it does, too many things will go with it and i am sure the security deposit it has with govt wont even be enuf to take care of the clients.
In all, they could have done things better, but there is no way Union Bank could have been allowed to go under.

and why not?