He did an interview with Financial Times (those people are good at asking questions compared to our own newspapers).

Here are some parts of the interview, click on the link to read the rest.

http://www.ft.com/cms/s/0/406e8650-ea69-11de-a9f5-00144feab49a.html



FT: You buy somewhere between what they paid and the price now and then you split the upside? Is that how it works?

LS: In a number of cases, to be honest, unless you bought the shares of the banks or the shares of other companies, the upside is not likely to be much. There are also cases where the collateral is not stock market.

FT: This is the oil loans business or real estate.

LS: In one of the banks, for instance, you’ve got huge insider-related transactions. The loans given by the CEO to herself or to her family members or to companies and SPVs floated instead of by her. But we also have assets that we’ve identified in Ikoyi, in VI [both wealth Lagos islands], in Abuja, in Port Harcourt, in Dubai. And there will be a whole legal process for forfeiture of those assets. So in theory, you could take that whole class of loans and buy at some discount from the bank and then the AMC gets those assets when the legal process is completed. And that is where you get the recovery.

FT: Is this across all the banks, are there similar cases? How much do you think is that chunk, in that real estate recovery?

LS: I think it will be substantial. If you take a bank like Oceanic, which is the one we are talking about, about 70 per cent of the loan is non-accrual. At least 70 per cent of that is somehow or other tied to the CEO and her family. So it looks like a big problem but it’s really a rather simple problem to resolve because you would then say, look, I want 70 per cent of your NPLs. I buy at 80 or 90 per cent and you just go and take it as recovery. And the EFCC then goes after all those assets and more. And then we can see what we can recover.

FT: But this is a new phase of recovery, isn’t it? This is a new phase of the recovery process because we’ve all been thinking about the stocks and the oil speculation but you’re talking about going after the hard assets.

LS: Well, yes, we always talked about the stocks because that was the quickest one to do and was what we thought we could do before the end of December. It’s not looking likely now. It might spill over into January but these stocks are easy in the sense that you can say this is the value today. This is what was paid for them. This is what we are paying. You could pay multiples, you could pay a premium but at least you know exactly what you are doing. With the property assets everywhere – and note Dubai property has gone down as well, so you have the same, property in Dubai, it was the same bubble that has also passed – you have a similar situation but the valuations are a bit more difficult, a bit more complex. So ultimately I think that the major consideration is going to be that we are in a very fortunate fiscal position today. We run a notional fiscal surplus. We have a current account surplus in excess of $6bn –


FT: What about how these banks are being run at the moment? Are they reporting personally to you, these MDs?

LS: No.

FT: But have you issued any instructions? Did you, for instance, tell those banks to sell their private planes? Did you tell them to reduce jobs?

LS: No, I didn’t. The relationship between the regulator and operator sometimes works on the basis of moral suasion. The private jet thing became a big issue in the market. In some institutions they will tell you they’ve got offices across regions, sometimes they travel, and it’s convenient to have these jets and the costs are not very high. But the jets had become a symbol of ostentation, of waste, especially in an environment where you’ve got so much poverty.

I never, in a formal meeting, said to anybody to sell. But I think the signal was out there; it was very clear that I thought it to be a responsible thing to stop it. And I believe a few of the banks, maybe all the banks, decided that it would be a proper thing to do it, and they did it.

[b]On reducing workers, I never did. These are privately run organisations. I think what you are referring to all this issue with labour. What happened was one of the banks in which we appointed a managing director wrote to the bank supervision department and said they had a problem, that their wage bill was almost Naira 5bn a month. Meanwhile their loans were non-accrual. They were not earning anywhere near enough to cover that cost. And therefore the hole was getting deeper and deeper. And the relationship officer in banking supervision then wrote to them in response and advised them to look at cost management, staff cost management, with the possibility of reducing salaries or reducing headcount because they were not earning what they thought they were earning.

Now, obviously, what happens again, when you talk about fighting, you have institutions where you’ve still got many staff that are loyal to the previous management, and that letter was taken and given to the press. And obviously then you’ve got journalists who were also working for those people and they made a lot of it, and they said well, you know, the central bank has instructed banks to reduce workers. You then had labour people who had also been provoked or incentivised who then said there is going to be a big industrial crisis for central bank. But that is basically what happened; there was never a circular. But HSBC recently laid off workers. It’s an industry; it doesn’t need the central bank to tell a bank to do that. [/b]

FT: There have been mistake along the way, inaccuracies in the debtors’ list or what have you. Has it all gone according to plan?

LS: It’s gone wholly according to plan. I think the mistakes that have been made are not mistakes of principle, and they are not mistakes that are due, let’s say, to a lack of diligence. There has been collateral damage. I’ll give you a few examples.

We’ve had names that were published as directors of companies and they had left the board, but the records of banks did not show that they had resigned. And when people came to us and said look, we have letters, we resigned from this company, we’ve actually filed; when this came to the commission we have promptly apologised and said well, we regret it, but this is the information that we had from the banks. Within the grand scheme of things we’re not perfect and we do acknowledge that maybe one or two things could have been done better. I haven’t seen anything that I would have done differently.

FT: Didn’t you have to reverse course over (removing Mike) Adenuga (from the board of) Equatorial Trust Bank?

LS: Yes, but that wasn’t about making a mistake at all; it was about a negotiation process that followed his removal. I had to make a number of judgements. I’ll tell you what the judgements were.

One, ETB: as a bank accounts for less than 1 per cent of total market. When you net out the part of the business that is related to Adenuga’s own companies it was about 0.5 per cent. How much energy are we to dissipate on that bank? It was unlisted, it therefore had no capital market related issues, no capital market manipulations, it didn’t have any margin loans, the number of loans were significantly associated with companies owned by Adenuga, he agreed to make immediate payments; I think so far he has paid down Naira 26bn. We did turn those into performing loans. He committed to re-capitalise the institution to dilute his ownership and move very quickly, under our own guidance, into an M&A arrangement, on the condition he accepted our own appointed management to remain in place.

[b]FT: This is an M&A arrangement with whom?

LS: [/b]I’m not at liberty now to talk about the institution he is talking to, but he did disclose he was in the process. He started a process, and he subsequently came and said he had started a process of discussion with one of the local banks that would basically take the bank into a larger institution. Now, given all of that, and given the fact that I had Union, Intercontinental, Oceanic, PHB to deal with, I made the judgement that given that there were also other things which this same person owns – Glo, which is a telecoms company, [petroleum group] Conoil – and as someone also looking at the macro economic implications of actions I had to think of whether it was worth risking trouble in the oil marketing and telecoms sectors. Because if people thought Adenuga was not credit worthy, and if the business of Glo or Conoil suffered, I had to make the judgements as to whether, for the kind of infractions we saw in a bank that was half a percent of the market, were worth taking that risk. So, that was the judgement I made. So, it wasn’t about a mistake; it was about if we can fix this problem, and by making sure he complies with these rules, then… Look, they are going to pay us back the Naira 30bn we gave them; this week they are going to pay it back. So, that is how quickly it’s been resolved.

FT: You will have seen the websites touting you for the presidency.

LS: No, I haven’t, honestly.

FT: Do you have any presidential ambitions?

[b]LS: [/b]No, I don’t. I have ambitions to be the emir of Kano [to which he is in line].

This guy speaks from both sides of his mouth!

alliednetw:

This guy speaks from both sides of his mouth!

the guy talks too much and act hastely.
he is indirectly or directly bringing woe to this economy,
, as all banks are now sacking staff.
, our economy is presently stagnant.

we shall continue praying for better.