This Is A Coup, Says Shareholders' Leader
By Marcel Mbamalu
THE alleged "frosty relationship" between new chief executives of 'troubled" banks and their shareholders' elected boards has been linked to a directive from the Central Bank of Nigeria (CBN).

The substance of the directive, The Guardian gathered, is that the bank CEOs should disregard their boards and instead relate with the CBN appointed "interim" boards.

It was gathered that consequent upon the directive by the Sanusi Lamido Sanusi-led CBN to the new CEOs to relate with "the remnant of the board members with utmost care," the new bank heads now operate in a manner suggestive of double standards.

This gives the impression of two boards existing in a bank, thus reportedly creating problems in the banks between the CEOs and their "real" board members.

According to a source: "Whereas the CBN says it has not taken over the banks, the result of this development is that these executives see themselves as employees of the apex bank and do not report to the real owners of the banks -the shareholders - as represented by the existing boards."

Also confirming the unhealthy issues in the banks, the National Coordinator of the Independent Shareholders Association of Nigeria, Sunny Nwosu, said

"Boards, as they are today, are divided on these banks because you have the shareholders-elected boards on one side, and you have the Central Bank Governor-appointed 'boards' on the other hand.

"What we are saying now is that a letter was given to the appointed management by the CBN Governor, telling them that they should have nothing to do with the boards.

"They do not have to report to the boards, and even if they have to do so, where there is disagreement, the boards will have to succumb to that of the management appointed by the CBN. It is never done. That's a take-over; and this is not known in law.

"In effect, what I'm saying is that there is a division and it is that the owners of the investment appointed all the directors. Along the line, some of those appointed by the owners of the business have been removed, leaving some of them.

"The newly appointed ones that did not follow the principles of law have been given more powers. It is like a military coup within a democracy. That is exactly what has happened."

It was gathered yesterday that the distrust existing between the CBN appointees and the surviving board members has led to both factions going their separate ways and working at cross purposes.

The schism, which the directive is said to be generating in the affected banks, has resulted in the failure of the existing board members to meet and ratify some of the appointments and forbearance granted by the CBN.

This is coming on the heels of a statement credited to the apex bank's governor, Sanusi Lamido Sanusi, to the effect that shareholders of the banks had lost their capital.

Although the apex bank had made statements suggestive of correcting that impression, it was, however, quoted in the media as saying that the shareholders of the embattled banks had lost their banks.

Some interests in the banking sector, yesterday decried the statement, insisting that, "the fact that such comments came from the highest level of banking regulation is, to say the least, very worrisome."

An international banking expert and CEO of The Banking Group, Kurt Kendis, in an email exchange, yesterday, cautioned against forceful sale of the banks, but maintained that in critical situations, shareholders become the losers.

He called on the media to be more responsible to the task of alerting investors of possible dangers in times of investment boom.

In both phases of the reform process, the apex bank had sacked the erstwhile managing directors of eight bank - Union, Afribank, Intercontinental, Oceanic, Finbank, Springbank, Bank PHB, and Equitorial Trust (ETB) - over what it described as serious breach of corporate governance codes and wanton issuance of 'unsecuritised' loans for margin trading and energy-sector businesses.

In the final analysis, a total of 620 billion was injected into the banks. But stakeholders maintain that the banks did not actually need that kind of capital as the issues in most of them were not as bad as the apex bank wants the people to believe.

The CBN governor was reported to have said that the "shareholders need to understand what we are doing and we are merely being charitable when we talk about shareholders."

"Look, you have lost your money. If your capital is zero or negative, you no longer have a bank,  If we publish what we have, they (shareholders) will see; there is no capital, it's been gambled away."

But Rewane Bismark, managing director of Financial Derivatives, told The Guardian that, as a regulator, the CBN was only meant to determine capital (in)adequacy, and not the market value of shares.

"The CBN," he said, "does not determine the value of shareholders' funds; the market determines that. If the market says that the shares are valueless, then they are valueless.

"What the CBN can establish is the level of capital adequacy or inadequacy, after which the shareholders can make a decision as to what to do.

"The CBN is not in market; it is a regulator. The market determines value while the regulator determines the level of adequacy that is necessary for you to operate," Rewane said.

http://www.ngrguardiannews.com/news/article01//indexn2_html?pdate=011109&ptitle=CBN%20Directives%20Causes%20Stir%20In%20'Troubled'%20Banks

I had always known that it will come to this.
A situation where a regulator determines without recourse and in disagreement with the shareholders the state of their own companies. And forcefully intervenes in banks administration with little or no consultation with the shareholders.

At present we are given the indication that the CBN do not own any of these banks but the CBN is weilding executive powers withing the banks.

This issue can be only be explained as a military coup where some elements by virtue of their powers go and forcefully take over the reign of an industry just like a country.

Nigeria is a country walking on the path to attaining its development goals no matter how imperfect it may be. Actions like this only serve to undo all the progress that have been made no matter how small. It is sad that some people , maybe due to their backgrounds or where ever they have gotten their ideas from still see all aspects of Nigeria as being entities that must be dictated to.

We should at this stage put ourselves in the shoes of those highly sought after foreign investors who are faced with reality of having their invetments intervened by government and the direction of these companies dictated by government elements with them not having any say in it.

I must also add that as an investor , this is a typical example of an economy where you do not invest your money.

While I had always maintained that the motives of Sanusi's actions seem viable, it is his methods that I have questioned.
His exposure to proper banking and coporate practices and governance.
His exposure to global financial markets and trends.
The lack of the above has lead to an increasing amount of gaffes, miscalculations and missteps. This guy is giving the impression that he is learning on the job.
How can a CBN governor say that if he releases the full account of Banks that share holders will realise that they have lost the investments and are no longer shareholders.
Even when the stock market says otherwise.
Is he aware that there are companies quoted in various markets which are running negative and are still traded with value.
I have over the years come to realise that a huge part of Nigeria problems lie on the fact that we keep on hiring mediocres to run this country even in the mist of more qualified personell and hence continue to undermine ourselves.

true talk.

But Rewane Bismark, managing director of Financial Derivatives, told The Guardian that, as a regulator, the CBN was only meant to determine capital (in)adequacy, and not the market value of shares.

"The CBN," he said, "does not determine the value of shareholders' funds; the market determines that. If the market says that the shares are valueless, then they are valueless.

The above quotation clearly shows that Nigerians are dealing with an ignorant and mischievious CBN governor. The proud Kano prince even thinks it's within his capacity as governor to determine share values. First it was the CEOs, soon, it's going to be small scale shareholders like you and me.

naijaking1:

First it was the CEOs, soon, it's going to be small scale shareholders like you and me.

naijaking comments expectedly.

make i remind una say de newspaper wey report dis propagandized information is owned by de ibrus. una sabi say cecelia ibru be one of de ceos wey dey on their way to prison after court find dem guilty. so make una no surprise at de extent wey dem go go to discredit people wey expose dem.

cbn governor no be police or law enforcer, na efcc charge de ceos for court. de governor just give efcc evidence and efcc file charges.

Bottom line? Do not invest your money in Nigeria.
We need someone with savvy to run the CBN. Area boy thinking is poor at any level, but is a destructive decease in the sophisticated areas of high finance.

ndu_chucks:

naijaking comments expectedly.

make i remind una say de newspaper wey report dis propagandized information is owned by de ibrus. una sabi say cecelia ibru be one of de ceos wey dey on their way to prison after court find dem guilty. so make una no surprise at de extent wey dem go go to discredit people wey expose dem.

cbn governor no be police or law enforcer, na efcc charge de ceos for court. de governor just give efcc evidence and efcc file charges.

I have always had doubts about Sanusi, and everyday, my doubts seem to be confirmed. Do you remember, last month, when I said that eventually sharholders would suffer? This article has proved me right, and proved you wrong.

No need to attack the newspapers---I know that's how you divert attention.
The same newspapers owned by Ibrus also report and carry Sanusi's unfounded allegations about CEOs----Cecilia, Akingbola, and now Adigwe.

Sanusi is not only just giving evidence to the law enforcement agencies, he and his people are actually going around the country to "expose" these CEOs in a manner that smacks of one-sided campaign of intimidation.

Everyday, we hear how corrupt these people are, how they stole, how they laundered money, how she gave billions to her baby-sitter, yack, yack, yack.
Have you ever wondered why the accused has not been able to respond?
A fair-minded person would actually want to hear the 2-sides of any story, but not you guys.

Beaf:

Bottom line? Do not invest your money in Nigeria.
We need someone with savvy to run the CBN. Area boy thinking is poor at any level, but is a destructive decease in the sophisticated areas of high finance.

This is the ultimate question that would open people's eyes. When you look for the answer, then Sanusi's religion, tribe, show-manship, and ego will suddenly become irrelivant, his poor managerial skills would be hopelessly exposed.

Who will agree with me that the alleged practices are completely against corporate governance practices in a free market economy.
If Sanusi is well grounded in conventional economics as many would claim, which one is he grounded in, too much government activity not to talk of the government practically running banks where you've got sitting executives in completely against the rudiments of Economics even the one being taught at ABU where he obtained a first degree and masters.
With bank CEOs reporting to government while ignoring shareholders at large is not only a serious breach of conduct but sets a dangerous bad precedence which will take Nigeria back for years.

WHERE ARE ALL THE SANUSI APOLOGISTS !!!

adigun101:

Who will agree with me that the alleged practices are completely against corporate governance practices in a free market economy.
If Sanusi is well grounded in conventional economics as many would claim, which one is he grounded in, too much government activity not to talk of the government practically running banks where you've got sitting executives in completely against the rudiments of Economics even the one being taught at ABU where he obtained a first degree and masters.
With bank CEOs reporting to government while ignoring shareholders at large is not only a serious breach of conduct but sets a dangerous bad precedence which will take Nigeria back for years.

WHERE ARE ALL THE SANUSI APOLOGISTS !!!

Don't worry, you wont wait for too long. There're all over the place like halloween ghost

I remember questioning this guy's qualification when some were busy praising how well his body fits in suits. Now, it is getting more obvious.

We are being faced with a serious problem, a problem brewed by mediocrity. This guy practically lacks the exposure, the multi-faceted grasp of the workings of a country's economy. Before his arrival, we heard from his predecessor about improving capacity, expansion, developing depth. When he came, we hear more about risk management. To me, it sounds like MTN Nigeria making a network security expert the CTO of MTN. His background is not just too tecky but also about control, about access limitation. This is Sanusi for you. Forget his masters in Economics and think about his ability to deliver on the job.

He is just being true to his antecedents, managing risks and if the thinking of such a guy matters to you, then expect him to build the system around him and not around an institution. Many more gaffes are on the way, he reminded us the other day that he was the CBN governor. He is not just cut out for that office. Period.

Frank-C:

I remember questioning this guy's qualification when some were busy praising how well his body fits in suits. Now, it is getting more obvious.

We are being faced with a serious problem, a problem brewed by mediocrity. This guy practically lacks the exposure, the multi-faceted grasp of the workings of a country's economy. Before his arrival, we heard from his predecessor about improving capacity, expansion, developing depth. When he came, we hear more about risk management. To me, it sounds like MTN Nigeria making a network security expert the CTO of MTN. His background is not just too tecky but also about control, about access limitation. This is Sanusi for you. Forget his masters in Economics and think about his ability to deliver on the job.

He is just being true to his antecedents, managing risks and if the thinking of such a guy matters to you, then expect him to build the system around him and not around an institution. Many more gaffes are on the way, he reminded us the other day that he was the CBN governor. He is not just cut out for that office. Period.

We hear more about risk management? That's the only thing we hear about from Sanusi, because that's the only aspect of banking he knows about.
I stated earlier that we don't need the blind men around the elephant syndrome, where the only thing they know about the animal is that's like a tree, because they're grasping its legs, or it's like a huge fan, because they're feeling the animal's ears.
We need somebody who can actually see and understand that the CBN is made of risk management, accounting, foreign exchange, consolidation, and personel departments.

when sanusi show rascality by some of his actions, i dey ready to condemn such actions and i don condemn dem, several times.

as far as i dey concerned, time will tell us how good or bad sanusi will turn out as de cbn governor.

my question to naijaking and his likes be dis: where is de outrage towards the ceos wey squander shareholder value to de point say the shares are now worthless? sanusi no be saint, but e good make we call spade a spade as far as the sacked ceos are concerned.

una supposed to be outraged by the mismanagement and possible crimes by these ceos as you are about sanusi's actions, if your outrage is honest.

ndu_chucks:

when sanusi show rascality by some of his actions, i dey ready to condemn such actions and i don condemn dem, several times.

as far as i dey concerned, time will tell us how good or bad sanusi will turn out as de cbn governor.

my question to naijaking and his likes be dis: where is de outrage towards the ceos wey squander shareholder value to de point say the shares are now worthless? sanusi no be saint, but e good make we call spade a spade as far as the sacked ceos are concerned.

una supposed to be outraged by the mismanagement and possible crimes by these ceos as you are about sanusi's actions, if your outrage is honest.

Are you for real?

Now it's the CEOs who squandered the share values? I just can't believe it.
What was the share values before Sanusi stupidly started to mess things up? If you can answer or even research this answer, you would understand your own lies.

Rememeber, because Sanusi said it, and you guys in his echo chambers repeated it doesn't mean it's true.
The facts are that the share values were on their way to recovery when Sanusi came on-board, now the share value of Oceanic went from 8 naira to less than 3 naira.

Fall in share values was one of the predictions we made about Sanusi's uncordinated activities at CBN, now it has come to pass, but you want to re-write history so soon.

Hmnn. . . . . . .

What then do investors do now? We should just wait for him to lead the banking industry to the cliffs?

naijaking1:

Are you for real?

Now it's the CEOs who squandered the share values? I just can't believe it.
What was the share values before Sanusi stupidly started to mess things up? If you can answer or even research this answer, you would understand your own lies.

we no go get anywhere if we no fit dey honest.  

de audits wey cbn conduct reveal say these banks been dey cook their books and no one actually knew de extent of their troubles. you fit blame regulators wey no uncover the issues, but dat one no change the fact say de banks have been in trouble for at least 18 months before sanusi enter cbn. the bank share values had been artificially inflated because public no sabi de truth.

it was simply a matter of time before the bank shares crash in value.  tings had been messed up long before sanusi  enter scene. na cbn loans wey dey cover de yansh of most of these banks.  yawa gas after sanusi stop giving them the loans.

if you no believe these tings, just wait make the trials of these ceos begin.  i sure say you go come back here with regrets. for now, make we await the trials.

ndu_chucks:

when sanusi show rascality by some of his actions, i dey ready to condemn such actions and i don condemn dem, several times.

as far as i dey concerned, time will tell us how good or bad sanusi will turn out as de cbn governor.

my question to naijaking and his likes be dis: where is de outrage towards the ceos wey squander shareholder value to de point say the shares are now worthless? sanusi no be saint, but e good make we call spade a spade as far as the sacked ceos are concerned.

una supposed to be outraged by the mismanagement and possible crimes by these ceos as you are about sanusi's actions, if your outrage is honest.

Time will tell?
We should be outraged (best scenario) when pot calls kettle black?

ono:

Hmnn. . . . . . .

What then do investors do now? We should just wait for him to lead the banking industry to the cliffs?

na de ceos wey don already lead una go cliff and drop una sef. cbn just dey try rescue at this point.  justice will be served when the ceos begin go prison.

by de time wey dem recapitalize the banks, investors fit recoup some of their losses. for now, na to just sit tight. frankly, de attrocities and financial crimes wey de ceos are accused of, is unforgivable.

make una go read de court papers for perspective.  with time some of dem go go prison like bode george, mark my word.

If the banks debt to banks, CBN and depositors is more than the market value of the bank, do the shareholders still own the bank?

ono:

Hmnn. . . . . . .

What then do investors do now? We should just wait for him to lead the banking industry to the cliffs?

The CEO's have already done that to the banks.

Its only in Naija that ignorance carries the day.

What shareholders is Guardian newspapers talking about?

As the newspaper says, the board is appointed by the shareholders.

If I may ask, who is the majority shareholder in the banks?

Abi, no be CBN?

The funny thing about this is that the new boards have not even been voted in yet. Only interim boards have been designated to steady the ship until the new board members are elected at the general meeting of shareholders, where CBN as the largest shareholder will still appoint the lionshare.

The old board members who fell asleep at the till had better go quietly. They have been[i] legally [/i] sacked. If they feel otherwise, there are many courts in the land who will hear their case against CBN, but as usual, they are mudraking for nothing.

Ibime:

Its only in Naija that ignorance carries the day.

What shareholders is Guardian newspapers talking about?

As the newspaper says, the board is appointed by the shareholders.

If I may ask, who is the majority shareholder in the banks?

Abi, no be CBN?

The funny thing about this is that the new boards have not even been voted in yet. Only interim boards have been designated to steady the ship until the new board members are elected at the general meeting of shareholders, where CBN as the largest shareholder will still appoint the lionshare.

The old board members who fell asleep at the till had better go quietly. They have been[i] legally [/i] sacked. If they feel otherwise, there are many courts in the land who will hear their case against CBN, but as usual, they are mudraking for nothing.

My brother tell them oh!!!!

If the CBN did not step in and one of the banks had defaulted on its loan (from foreign banks), the foreign banks automatically become the owner of the bank based on the debt.

The fake (cooked up) value of this banks have fallen.

Has anyone not wondered how one stockbroker could owe 100+ billion. Or is it normal?

naijaking1:

Fall in share values was one of the predictions we made about Sanusi's uncordinated activities at CBN, now it has come to pass, but you want to re-write history so soon.

hehehehe, no make me laugh abeg.

ceos squander shareholder value and cook books, lied to shareholders and regulators, resulting in artificially high share value.  obviously when de lies become public, the share values must fall. any fool fit predict dat one.

de question is dis: should we hold de ceos and other executives wey lie to shareholders and regulators, wey make billions on naira in loans to themselves, wey mismanage shareholder money, responsible for the fall in share value?  or na cbn wey we go hold responsible?

naijaking1:

Are you for real?

Now it's the CEOs who squandered the share values? I just can't believe it.
What was the share values before Sanusi stupidly started to mess things up? If you can answer or even research this answer, you would understand your own lies.

Rememeber, because Sanusi said it, and you guys in his echo chambers repeated it doesn't mean it's true.
The facts are that the share values were on their way to recovery when Sanusi came on-board, now the share value of Oceanic went from 8 naira to less than 3 naira.

Fall in share values was one of the predictions we made about Sanusi's uncordinated activities at CBN, now it has come to pass, but you want to re-write history so soon.

Are you for real?

The share price of banks only started to fall when Sanusi came in?

What was happening between September of 2008 and March of 2009?

Why did Bloomberg News call the Nigeria Stock exchange (which is dominated 60% by banks) the worst performing in the first quarter?

http://allafrica.com/stories/200904020020.html

Ibime:

Its only in Naija that ignorance carries the day.

What shareholders is Guardian newspapers talking about?

As the newspaper says, the board is appointed by the shareholders.

If I may ask, who is the majority shareholder in the banks?

Abi, no be CBN?

The funny thing about this is that the new boards have not even been voted in yet. Only interim boards have been designated to steady the ship until the new board members are elected at the general meeting of shareholders, where CBN as the largest shareholder will still appoint the lionshare.

The old board members who fell asleep at the till had better go quietly. They have been[i] legally [/i] sacked. If they feel otherwise, there are many courts in the land who will hear their case against CBN, but as usual, they are mudraking for nothing.

Old boy na wa for you-o!
When you want to see what ignorance looks like, just get a mirrow.

CBN does not own majority share in many of these banks. The role of CBN is to regulate, not to own. Even with injection of a paltry 400 billion naira , CBN is far from being major sharholders. Union bank is worth over 2 trillion, and Sanusi questionably injected 100billion, does that make CBN the major share holder?
If CBN or the government owns these banks there would be less brouhaha, but the core issue with this excersise has been that Sanusi wants to assume banks owned by neither himself, his papa, his CBN, or even the government.

The shareholders are the real owners of the banks, but the government can always "nationalize" these banks the way OBJ did Barcklay's bank and Standard banks in the 1970s, because of their support for apertheid south Africa; First and Union banks were formed. We dare Sanusi to nationalize these banks because the majority stakes are owned by southerners, or on the pretext that the CEOs were corrupt. Maybe the shareholder who put a good percentage of his salary down to buy these stocks were also criminals?

cvibe:

Has anyone not wondered how one stockbroker could owe 100+ billion. Or is it normal?

While the number maybe huge, it's not up to you or Sanusi to preach about how many shares an individual or group of individuals could own, it's the work of the NSE. This is the type of ignorance we have seen in supposedly high financial places throughout this incident. Yes, it is normal, and even appreciated, because it's called investing in Nigeria.
If the stockbroker stole the money or committed any other type of fraud, that's different, and should be investigated.

ndu_chucks:

na de ceos wey don already lead una go cliff and drop una sef. cbn just dey try rescue at this point.  justice will be served when the ceos begin go prison.

by de time wey dem recapitalize the banks, investors fit recoup some of their losses. for now, na to just sit tight. frankly, de attrocities and financial crimes wey de ceos are accused of, is unforgivable.

make una go read de court papers for perspective.  with time some of dem go go prison like bode george, mark my word.

You're totaly confused about CEOs committing crimes and about the goverment(CBN) maintaining investors' confidence. We're still working on trying to prove that the CEOs committed any crimes, but you and Sanusi want to blame the CEOs and the shareholders for appointing a mediocre and confused CBN governor who doesn't instil confidence in investors. ---- eating your cake and having it too. Even as we speak, Sanusi continues to erode investors confidence and that has nothing to do with the CEOs.

naijaking1:

We're still working on trying to prove that the CEOs committed any crimes.

oh boy, you sure say obj, ibb, ibori, and other ex presidents and governors steal money from us so? i no tink say you fit prove say any of these people tief one kobo from our treasuries, just as you no fit prove say de accused ceos commit any crime.

congratulations sir.

Ultimately, Marabout Sanusi has made a pigs ear of this matter. He could have handled things differently, of that there is no doubt.
He might as well go all the way and probe Soludo because his inference is that Soludo was corrupt and presided over a rotten system.

naijatoday:

My brother tell them oh!!!!

If the CBN did not step in and one of the banks had defaulted on its loan (from foreign banks), the foreign banks automatically become the owner of the bank based on the debt.
The fake (cooked up) value of this banks have fallen.

You're just repeating or echoing one of Sanusi's false and misleading mantra.

naijatoday:

Are you for real?

The share price of banks only started to fall when Sanusi came in?

What was happening between September of 2008 and March of 2009?

Why did Bloomberg News call the Nigeria Stock exchange (which is dominated 60% by banks) the worst performing in the first quarter?

http://allafrica.com/stories/200904020020.html

You don't even have to go to Bloomberg, just go to NSE. Before Sept. 2008, Oceanic stock was #38, when stock prices fell all over the World it came down to around #17, when Sanusi took over, it was about #15, today, it's less than #3. Go figure, but please don't go blaming the CEOs or the shareholders.

naijatoday:

If the banks debt to banks, CBN and depositors is more than the market value of the bank, do the shareholders still own the bank?

Now, I see your motive. Artificially forcing down the share prices of these banks as a way of making it easier for Hausa people to take over ownership will be the most laughable case of documented "armed robbery" of the decade.

SapeleGuy:

Ultimately, Marabout Sanusi has made a pigs ear of this matter. He could have handled things differently, of that there is no doubt.
He might as well go all the way and probe Soludo because his inference is that Soludo was corrupt and presided over a rotten system.

It will be good for him to probe Soludo, so that the man can give Nigerians a broader understanding of this issue, not just from a risk management point of view.
I doubt that he will dare probe Soludo, because even though Sanusi hasn't shown himself to be a smart banker, he has shown himself to be a better politician than a banker.

naijaking1:

It will be good for him to probe Soludo, so that the man can give Nigerians a broader understanding of this issue, not just from a risk management point of view.
I doubt that he will dare probe Soludo, because even though Sanusi hasn't shown himself to be a smart banker, he has shown himself to be a better politician than a banker.

You are right, he can get more leverage by continually implying Soludo's achievement was tarnished by corruption. But what is Sanusi's legacy going to be?