The Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, yesterday foreclosed the possibility of returning the five banks whose management teams were recently sacked  to their former majority owners, saying the era of running banks as sole proprietorships was over.

This came hours after the banking watchdog said it will put out of circulation the current N5, N10 and N50 notes, which have now been replaced with polymer – a plastic material made from petrochemical products – by the end of March 2010.

Speaking at  an interactive session with the capital market community on the floor of the Nigerian Stock Exchange (NSE), Sanusi  also said the results of the audit of the remaining banks would be made public early October 2009.

CBN had on August 14 sacked the managements of five banks – Afribank, FinBank, Intercontinental Bank, Oceanic Bank and Union Bank – over the huge non-performing loans of their banks and other alleged financial abuses.

The apex bank also injected N420 billion into them, saying lax governance had left the five banks undercapitalised.

Thereafter, it appointed new helmsmen into these institutions to stabilise and make them attractive for core investors.

Explaining the actions taken in respect of the five banks, Sanusi said that for now, the CBN had not offered them to any investors.

He said: “At this stage, we have not offered any of the banks to investors. We do not intend to force any investor on these banks. However, the CBN will not allow the banks to go back to the same one-man structure that led them to where they are. We will look for appropriate core investors, local or foreign that will bring the governance, the system and skills that will preserve the long-term value of shareholders by building an institution. We are not ready to hand over these banks to the former owners who ran them aground. We do not want sole proprietorships. Going forward, any bank that is licensed or that is operating must bear its mind towards becoming an institution and not sole proprietorship.”

The CBN governor said shareholders of the banks would be carried along whenever the time comes for them to be sold.

“Even when we have rights under the laws, we have chosen to use them responsibly. When there is a conflict between Banking and Other Financial Institutions Act (BOFIA) and Companies and Allied Matter Act (CAMA), BOFIA reigns supreme. However, the CBN is very concerned that there are many people who have bought shares in the banks and who have nothing to do with the conditions that the banks are and who must be treated in fair and transparent manner in everything that we do. We will no treat shareholders unfairly and we will go through all the processes we need to go through before any change is made.  But we will not allow the institutions to fall back to the scenario they were before,” he said.

Speaking on margin facilities granted by some of the banks to capital operators, Sanusi  advised banks to stick to any repayment arrangement made before the banking reform commenced.

Stockbrokers had told him that before the five CEOs were sacked, they had entered into restructuring agreements with banks to repay their loans over a certain period of time, but that the take-over of five of the banks has necessitated some of these banks to renege on the agreements.
Sanusi said he did not ask anybody to go after any stockbroker.

“How the banks organise with their borrowers to recover their money, whether two years or more the CBN will not dictate. If anybody tells you that I said go to that broker and recover your money, that one I did not do. What we said is that the banks should make provisions for the facilities that have depreciated due to the losses in the market.

“What we are saying is that make the necessary provisions and recognise the losses. If the market bounces back, take the profit. But for now recognise the losses. However, you can understand the pressure they are under and they have shareholders and they have made losses. The only way to minimise their losses is to accelerate recovery,” he said.

However, Sanusi blamed some of the banks and stockbrokers for the huge amount borrowed for stocks trading.

Sanusi, who said that the failure of all regulators in the financial system partly led to the current problems, added that the primary focus should be the lessons so far learnt from the incidences that led to the sack of the CEOs of the five banks and the fallout.

“For us all, what lessons have we learnt from the situation? I mean the CBN Securities and Exchange Commission (SEC), NSE and the brokers. What changes are we putting in place to make sure that these mistakes do not happen again? Going forward, there should be more collaborative efforts among the regulators,” he said.

The CBN boss said that contrary to reports, foreign banks are still dealing with the five banks, adding that credits lines of the latter have not been withdrawn.

Meanwhile, the chief executives of the five banks have assured Nigerians that the  loan recovery efforts are on course. The CEO of Oceanic Bank,  Mr. John Aboh, said so far N20 billion has been recovered. Similarly, the CEO of Afribank Nigeria, Mr. Nebolisa Arah, disclosed that N20 billion had been recovered, while FinBank Plc, according to its CEO, Mrs.  Suzanne Iroche, had recovered N5.5 billion. The CEO of Intercontinental Bank, Mr, Lai Alabi said a total of N29.6 billon had so far been recovered.

On her part, the CEO of Union Bank, Mrs. Funke Osibodu, said the bank targets 35 per cent recovery before the end of the year, saying about 10 per cent had been achieved.

Meanwhile, the current N5, N10 and N50 notes billed to be phased out by the end of March 2010 will be printed in polymer and put in circulation from September 30 this year after a formal launch by President Umaru Musa Yar’Adua.

The new notes will circulate side by side the old notes for six months when the latter will cease to be legal tender.

Sanusi said that the apex bank will from today commence sensitisation of the public on the new notes across the country, using various medium of communication.

He said the notes have retained their current sizes, designs and other key elements, adding that the watermark has been replaced with the transparent window and G-switch which turns from green to gold when the note is lifted.

The Governor said 1.9 billion pieces of the new currencies are ready for circulation, having been printed by the Nigerian Security Printing and Minting Company and a foreign printing firm.

The CBN had in 2007 during the tenure of the former Governor, Professor Chukwuma Soludo, launched currency reforms. The first phase was the conversion from paper to polymer. The currency reform was meant to address the convenience, security, durability and cost effectiveness of the naira. Only the N20 note was converted that year.


http://www.thisdayonline.com/nview.php?id=154713

That should clear things up a little bit.

Ibime:
That should clear things up a little bit.

Really?  My head hurts from trying to figure out what the hell they are trying to confuse us about.

We do not intend to force any investor on these banks. However, the CBN will not allow the banks to go back to the same one-man structure that led them to where they are. We will look for appropriate core investors, local or foreign that will bring the governance, the system and skills that will preserve the long-term value of shareholders by building an institution.

from de ting wey sanusi talk here, e be like say,  na bankruptcy wey those 5 banks dey head, and na de N420billion dey keep dem afloat at de moment. so de banks must raise more money to take meet de capitalization requirements of CBN, otherwise dem no go fit exist as banks again. up till now, nobody don dispute this fact, otherwise, court for don stop Sanusi from de apparent rascality wey him dey show.   

as for de one-man structure comment, I believe say dat one na cheap shot wey sanusi aim at Oceanic bank and the Ibrus. una sabi say na Ibru group wey build dat bank from scratch so dem be super majority shareholder. sanusi dey imply say, na because of dat kind ownership wey lead to de bad loan decisions wey result to current crisis. sanusi dey imply say when one family (one man) get dat kind control of any bank, opportunity for abuses and finacial crimes dey.

CBN and Sanusi evidently give efcc incriminating evidence of financial crime by many of de debtors including stokebrokers wey follow borrow money - na de reason wey dem arrest some of dem be dat.

we full for ground, dey look. time will tell whether all de so-called reforms by CBN go get long term benefit and whether de accused people dey guilty of any crime.

Is Union Bank a one-man bank? The problem with our banks, as with the problem with Nigeria, is sysytemic and not about individual person. Proper instintutions must be in place and supervisory roles must be duly effected before we can say we get it right.

It is drame time once again. What Sanusi is doing is playing to the gallery, which is what the Nigerian government often do to create diversions from the fact that it is the government itself that plague the Nigerian people and not the private sector.

bulkman:

Is Union Bank a one-man bank? The problem with our banks, as with the problem with Nigeria, is sysytemic and not about individual person. Proper instintutions must be in place and supervisory roles must be duly effected before we can say we get it right.

It is drame time once again. What Sanusi is doing is playing to the gallery, which is what the Nigerian government often do to create diversions from the fact that it is the government itself that plague the Nigerian people and not the private sector.

Good question.

Bye the way, what is wrong in having a one man/family business? I suspect, Sanusi might have been referring to the Ibrus and Oceanic, but the truth is that it's better to invest in Nigeria than to stash the money away in some Swiss bank.

IBB, Abubakar, and other northern thieving billionaires could afford to own a bank if they wanted to, but no, they would rather hide their ill-gotten wealth in a foreign country.

Please, please can someone ask Sanusi this very important question: do you believe in capitalism?

People should not be fooled by sanusi's action.What does he mean by one man bank.where were his fathers and his grand fathers when they were selling banking license in nigeria.was it two kobo then to get license to operate a bank.His cohorts and his family members were busy waiting on federal allocation ,quota system and federal government ministries to work in when people were slaving their arse to run their private business to make profit.
Bleep him .whatever reforms he wanted to carry out ,let him bring out the guidelines let us see and he should stop parading himself like a monkey in his monkey suit and bow tie .and be insulting our sensibilities.We practise capitalism and that means no govt has a right to dictate ownership structure to a private company.
Come to think of it ,all these investors he is running to to come and buy the bank are they not owned by one man .I want lamido to prove me wrong on these

@smoothline i agree completely with you, of what concern is the apex bank with either one man or not? the task of the apex bank is to effect proper banking conduct and regulations.

Has Sanusi, the Islamist scholar said excatly what is wrong with having a one-man bank?
We have one-man banks, one-man airlines, one-man industries, and even one-man universities all over the World, so what's the matter with a one-man bank in Nigeria?

Mike Adenuga beware,cos this Sanusi guy appears to be high on some stuff

naijaking1:

Has Sanusi, the Islamist scholar said excatly what is wrong with having a one-man bank?
We have one-man banks, one-man airlines, one-man industries, and even one-man universities all over the World, so what's the matter with a one-man bank in Nigeria?

My thoughts exactly,jeeeeeeeeeeeeez
Where's this man taking the banking industry to? I suspect the next move he'll make will be that banks should not lend money out an an interest

naijaking1:

Good question.

Bye the way, what is wrong in having a one man/family business? I suspect, Sanusi might have been referring to the Ibrus and Oceanic, but the truth is that it's better to invest in Nigeria than to stash the money away in some Swiss bank.

IBB, Abubakar, and other northern thieving billionaires could afford to own a bank if they wanted to, but no, they would rather hide their ill-gotten wealth in a foreign country.

well said.

nice warning but a little too late, the hammer don land.